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Fri, 15 Mar 12:30 pm

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Share markets in India are presently trading on a positive note. Sectoral indices are trading mixed with stocks in the banking sector, IT sector and finance sector witnessing maximum buying interest, while telecom stocks and FMCG stocks are witnessing selling pressure.

The BSE Sensex is trading up by 246 points (up 0.7%), while the NSE Nifty is trading up by 79 points (up 0.7%). The BSE Mid Cap index is trading up by 0.5% and the BSE Small Cap index is trading up by 0.3%.

The rupee is trading at Rs 69.20 against the US$.

In the news from the aviation space, Jet Airways share price is witnessing selling pressure today on reports that the debt-laden airline could be staring at another default of $109 million, which is to be paid by March 28 to the HSBC Bank Middle East as the second tranche of the $140-million loan it had taken in 2014 and for which Etihad stood guarantor.

On March 11, Jet Airways defaulted on its external commercial borrowings (ECBs) of $31 million, payable to HSBC and guaranteed by Etihad Airways.

In a letter to HSBC on March 11, the domestic airline had said it is going through a severe liquidity crunch and is working on a bank-led resolution plan for its revival.

Selling pressure is also seen on reports that Etihad Airways is unlikely to agree with the provisional debt resolution plan proposed by the lenders.

As per an article in a leading financial daily, a meeting of the board of Etihad in Abu Dhabi on Tuesday remained inconclusive, with several members expressing reservations about the terms proposed by the lenders that included adding two nominee directors from the promoter group of Jet Airways, led by founder Naresh Goyal.

As per the provisional pact, a 'new investor' was to inject between Rs 16 billion to Rs 19 billion for about 20% in Jet Airways and the Goyal-led promoter group's stake was to fall to 17.1%. At present, Etihad holds 24% stake in Jet, while promoter Goyal and his family own a controlling 51% stake.

Etihad's board is expected to meet again to discuss the revised terms. An early resolution to the financial woes is crucial for crisis-hit Jet Airways as 61 of its 116 aircraft are currently grounded by lessors due to non-payment of lease rentals. It has also delayed salaries to pilots and interest payments on its debt.

Yesterday, Etihad Airways also reported its third consecutive annual loss despite cost savings as it trimmed its workforce. The Abu Dhabi state-owned airline blamed challenging market conditions including higher fuel prices.

Jet Airways had tried to lease or sell some of its owned aircraft to raise money that could help pare its over Rs 80 billion debt. But the plans, including a wet leasing deal with TruJet for its ATRs, got stuck.

As per an article in a leading financial daily, aircraft lessors have been supportive of the company's efforts in this regard. The company is also making all efforts to minimize disruption to its network due to the above and is proactively informing and re-accommodating its affected guests.

Jet Airways share price is presently trading down by 2%.

Moving on, in the latest developments from the IPO space, the initial public offering (IPO) of MSTC was subscribed 13% so far.

The issue received bids for 22,21,650 shares till 10:15 AM, representing 13% of the total 1,76,70,400 shares on the block.

The government has proposed to offload 25%, of total paid-up equity in the largest B2B e-commerce company in India. The issue by the Kolkata-headquartered firm will close today.

The company's three main business verticals are e-commerce, trading, and recycling.

With over 1,90,000 auctions serving over 1,10,000 users as of 31 December 2018, the company is the preferred service provider for various governments and government-controlled entities. The trading firm has conducted 28,600 auctions/events during 2017-18 and 30,500 auctions/event for nine months ended 31 December 2018.

To know more about the company, you can read our IPO analysis of MSTC (requires subscription).

Speaking of PSU companies, it's election time and PSU stocks are back in vogue.

The last election saw a short-term outperformance of the PSU Index compared to the Sensex.

Will history repeat itself? Have a look at the chart below to see how PSUs have performed the overall markets in the long run:

PSU Stocks - Perpetual Value Traps?

Here's what Tanushree Banerjee, Co-head of research at Equitymaster, wrote about it in one of the recent edition of The 5 Minute WrapUp...

• What we have seen from history, is that PSUs have underperformed the overall markets in the long run.
  
  Non-performing assets (NPA) in the banking space and rising crude oil prices impacting oil marketing companies have all taken a toll in recent years.
  
  On top of that, when the government is in desperate need of money, they turn to PSUs. This usually leaves minority shareholders shortchanged.
  
  Not all companies in the sector can be ignored. But most of them turn out to be value traps.

She believes, a better alternative is to look at quality companies which are not restricted by regulatory hurdles.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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Indian Share Market Update: Top Gainers and Losers