Asian stock markets have opened the day on a weak note. Stock markets in Singapore (down 0.8%), Hong Kong (down 0.6%) and Japan (down o.6%) are leading the losses. However, stock markets in China (up 0.7%) are trading firm. Indian stock markets have opened the day on a flat note. Stocks from capital goods, auto and FMCG space are leading the gains. However, stocks from the IT and healthcare space are trading weak.
The BSE-Sensex is trading higher by around 18 points (0.1%), while the NSE-Nifty is up by around 3 points (0.1%). Mid and small cap stocks are also trading firm, with both the BSE Midcap index and BSE Small cap index up by 0.2% and 0.3% respectively. The rupee is trading at 44.76 to the US dollar.
Oil & gas stocks have opened the day on a weak note with ONGC, Cairn India and BPCL trading in the red. Reliance Inds (RIL), India's largest private sector company, has inked an equal financial services joint venture agreement with DE Shaw Group. The joint venture will be RIL's foray in the fast growing Indian financial services business. DE Shaw is a New York-based global private equity and hedge fund company. The Mukesh Ambani-led company and Reliance Anil Dhirubhai Ambani Group (ADAG) had scrapped the non-compete agreement in May 2010. Soon afterwards, RIL forayed into the telecom sector with a US$1 bn investment in Infotel Broadband Services, the only company to win pan-India broadband spectrum in a government auction. RIL's move is significant in the context of RBI being ready to allow big industrial houses to set up banks. The regulator's draft guidelines on new bank licensing norms are awaiting the finance ministry's clearance.
Telecom towers are a necessity for telecom companies. Especially for those who are rolling out services. As a result, a company which has an existing portfolio of towers views the tower portfolio as a major source of value. This is exactly the case with Idea Cellular, the country's third largest telecom company (by revenues). Idea's management has recently stated that the company sees its portfolio of 7,500 towers as a potential value unlocking opportunity. This portfolio is outside of the towers that Idea holds through Indus Towers. The company's new CEO , Mr. Himanshu Kapadia, has stated that the towers are in some of Idea's leading markets and have significant value in them. The company plans to use its tower portfolio to unlock some of the value for its shareholders. The same may be done either through a public offering of the tower company, Indus Towers. However, the timing of the IPO will be an issue that needs to be agreed upon by all of Indus' stakeholders. Another way the company may look at unlocking value would be through a stake sale in Idea Cellular. It may also look at hiving off the fully owned tower portfolio if it is able to identify an investor which has no strategic interest in the towers. Idea Cellular already has two major stake holders besides the promoter, Aditya Birla Group. These are Axiata of Malaysia and Providence Private Equity which hold about 19% 10% stake in the company respectively. The stock of the company is currently trading in the red. telecom stocksBharti Airtel and Reliance Communications are also trading weak.