Markets ascend to day’s high in afternoon trade

Going from strength to strength, the local equity indices gathered further ground and hit fresh intraday highs in afternoon trade, on sustained buying activities by funds and retail investors. Sentiments on the street improved further with Commerce and industry minister Piyush Goyal’s statement that reform momentum towards self-certification, labour laws and environment clearance will boost investment and production. Additional support also came with data showing that after declining for four consecutive months, investments through participatory notes (P-notes) in the Indian capital market marginally rose to Rs 76,773 crore at the end of October. Traders also took note of Union Finance Minister Nirmala Sitharaman’s statement that India did not join the Regional Comprehensive Economic Partnership (RCEP) as the offer was not as much as our aspirations. Moreover, the appreciating rupee against the US dollar coupled with firmness in Asian stocks supported the sentiments. On the sectoral front, jewellery sector remained in focus as the government is working on an integrated gold policy, which is expected to be released soon. The policy is aimed at promoting growth of the yellow metal industry and exports of jewellery.

On the global front, Asian markets were trading mostly in green, amid some optimism that the U.S. and China may edging closer to a trade deal. Back home, the BSE Sensex is currently trading at 40705.77, up by 346.36 points or 0.86% after trading in a range of 40393.90 and 40714.70. There were 26 stocks advancing against 5 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index rose 0.75%, while Small cap index was up by 0.54%.

The top gaining sectoral indices on the BSE were Telecom up by 4.63%, Metal up by 2.68%, Basic Materials up by 1.54%, Auto up by 1.24% and Realty up by 1.16%, while Utilities was down by 0.03% was the lone losing index on BSE.

The top gainers on the Sensex were Bharti Airtel up by 4.92%, Tata Steel up by 3.55%, Vedanta up by 2.53%, Maruti Suzuki up by 2.11% and Indusind Bank was up by 1.92%. On the flip side, Yes Bank down by 2.55%, ONGC down by 1.35%, ITC down by 0.40%, NTPC down by 0.38% and HCL Technologies was down by 0.36% were the top losers.

Meanwhile, the credit rating agency Fitch has said that a two-year moratorium for telecom companies to pay their spectrum dues and tariff hikes in mobile phone call and data charges from December 2019 may not be sufficient for Bharti Airtel and Vodafone-Idea to offset the impact of the Supreme Court ruling on payment of past statutory dues. In October 2019, the Supreme Court had ruled that non-telecom revenues will be included while calculating statutory dues towards the government. Besides, Fitch has assigned a negative outlook to the telecom sector for 2020 primarily due to heightened financial risk associated with the large unpaid statutory dues. 

The US-based agency has said that the incumbents are likely to file a review petition in the Supreme Court and have also approached the government to seek other forms of relief, including waiver or grant of deferred payment terms for the dues and reduction of licence fees and spectrum usage charges. Despite the tariff hike, Fitch still believes it will take negative rating action on Bharti if it pays the adjusted gross revenue (AGR) dues within three months and funds the payments entirely by debt. It added that the divergence between Bharti's and Vodafone Idea's financial performance continued in 2QFY20, while Reliance Jio, a subsidiary of Reliance Industries (RIL), continued to report solid financial performance with 2QFY20 revenue rising by 6 percent qoq and EBITDA up by 10 percent.

Fitch expects Vodafone Idea to continue to struggle to improve its EBITDA amid fierce competition, limited financial flexibility to invest and a shrinking subscriber base. It stated that Vodafone Idea disclosed that it had to reclassify some long-term debt to current debt as it failed to meet certain financial covenants in bank loan documents, and it is in discussion with the lenders to request waivers. However, it said Reliance Jio is not affected by the ruling and is likely to continue to gain revenue market share, which will support RIL's deleveraging plans.

The CNX Nifty is currently trading at 12019.90, up by 105.50 points or 0.89% after trading in a range of 11919.75 and 12025.80. There were 42 stocks advancing against 8 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 5.15%, Bharti Infratel up by 4.31%, Hindalco up by 3.84%, Tata Steel up by 3.33% and Grasim Industries was up by 2.76%. On the flip side, Yes Bank down by 2.39%, Zee Entertainment down by 1.91%, ONGC down by 1.46%, GAIL India down by 0.61% and Wipro was down by 0.51% were the top losers.

Asian markets were trading mostly in green; Hang Seng increased 400.80 points or 1.51% to 26,995.88, Nikkei 225 surged 179.93 points or 0.78% to 23,292.81, KOSPI rose 21.54 points or 1.02% to 2,123.50, Shanghai Composite gained 14.69 points or 0.51% to 2,899.98 and Straits Times was up by 5.50 points or 0.17% to 3,231.15.

On the flip side, Taiwan Weighted dropped 5.22 points or 0.05% to 11,561.58 and Jakarta Composite was down by 18.01 points or 0.3% to 6,082.23.