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Sensex Ends Day in Red; IT Stocks Rally
Wed, 25 Apr Closing | Parth Parekh, TM Team

After opening the day in red, share markets in India witnessed volatile trading activity throughout the day and ended the day in red. Sectoral indices were mixed, with stocks in the IT sector and stocks in the telecom sector leading the gains.

At the closing bell, the BSE Sensex stood lower by 115 points (down 0.3%) and the NSE Nifty closed down by 44 points (down 0.4%). The BSE Mid Cap index ended the day down 0.5%, while the BSE Small Cap index ended the day down by 0.7%.

Asian stock markets finished in red. As of the most recent closing prices, the Hang Seng was down by 1% and the Shanghai Composite was down by 0.4%. The Nikkei 225 was down by 0.3%. Meanwhile, European markets too were trading in red. The FTSE 100 was down by 0.7%, The DAX, was down by 1.5% while the CAC 40 was up by 0.6%.

The rupee was trading at Rs 66.78 against the US$ in the afternoon session. Oil prices were trading at US$ 67.15 at the time of writing.

Bharti Airtel share price was in focus today after it approved merger of its listed tower arm with privately held Indus Towers Ltd. to create the largest telecom infrastructure company outside China.

Bharti Infratel currently owns 42% equity interest in Indus Towers, which has a portfolio of 1,22,920 towers as of June 2017.

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The combined entity between Bharti Infratel Ltd. and Indus Towers will have more than a third of the market with 163,000 towers.

Bharti Airtel, India's largest telecom operator, and Vodafone India Ltd. own 42 percent each in Indus Towers, while Idea Cellular Ltd. holds 11.15 percent. The remaining 4.85 percent is held by U.S.-based private equity firm Providence.

The proposed merger will unlock value for the telecom incumbents in India.

The entry of Reliance Jio and the fierce tariff war it has triggered has set off brisk activity in the telecom industry for fundraising and consolidation, as the incumbents look for ways and means to fend off the competition.

Telecom Sector: A decade of Underperformance

Note that the whole telecom business has been an underwhelming story so far. While the telecom subscriber base has increased from 300 million in 2008 to 1.2 billion in 2017, investors have little to cheer. The BSE Sensex has gone up 3.25 times in nine years, but the BSE Telecom Index has not moved an inch from its levels of 2008.

Telecom companies are straddled with high debt, intense competition, and lack of pricing power. High spectrum costs and regulatory issues have hampered the sector. While consumers have benefited from low costs and new players fighting for their share, investors have suffered.

With the entry of Reliance Jio, the competition has intensified further. Reliance Jio's low cost offerings and strategy of capturing market share will further dent the sector. The sector has been a classic 'value trap'. While it always looks cheap compared to other sectors, it has failed to provide any reasonable returns. We also believe the situation is unlikely to change in the near future. For an investor, it's important to differentiate between 'value' and 'value traps'.

Moving on to news from stocks in the automobile sector. Tata Motors share price was in focus today after its erstwhile partner Volkswagen AG signalled it isn't shutting the door on a tie-up with the Indian automaker.

Volkswagen said that it is working on a strategy to bring budget cars to millions of cost-conscious buyers in the South Asian country, and a collaboration with the owner of Jaguar Land Rover is possible.

The planned tie-up with Tata announced last year was aimed at achieving cost savings and technical synergies but was scrapped in five months. At the time, they said they could revive cooperation efforts in the future if the conditions arise.

In March last year, the two companies signed a memorandum of understanding at the Geneva Motorshow to explore various options, including a partnership for the development of Tata's new advanced modular platform (AMP), a joint venture or a contract manufacturing agreement, in a bid to achieve economies of scale that would have helped to cut costs.

In August last year, the companies said that they have performed a technical feasibility and commercial evaluation of a potential collaboration and jointly concluded that the envisioned areas of partnership may not yield the desired synergies as originally assessed.

However, both the companies had said they would keep the door open for future collaborations and partnerships.

Tata Motors share price ended the day down by 0.9%.

And here's a note from Profit Hunter:

Bharti Airtel is the top gainer in the Nifty 50 Index. The company announced its quaterly results yesterday after the market hours and today, the stock is up 3.5%.

The stock touched a life-time high of 565 in November 2017 and slipped lower to trade in a downtrend. It traded in a falling channel line from February 2018.

It touched a low of 375 a few days back. It bounced up from this low after finding support from the horizontal support line. The stock also found support from the channel's support line.

Today, the stock broke above the channel's resistance line with strong volumes. The RSI indicator also formed a bullish divergence with the price.

So will the stock challenge the life-time high or it is just a bounce before it resumes its downtrend. Let's wait and watch...

Bharti Airtel Broke Channel's Resistance
Bharti Airtel Broke Channel's Resistance 

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Stock Market Updates

JAIPRAKASH ASSO. surged by 5%; BSE REALTY Index Down 0.5% (Today's Market)

May 24, 2018 11:49 AM

JAIPRAKASH ASSO. share price has surged by 5% and its Current Market Price is Rs 16. The BSE REALTY is down by 0.50%. The top gainers in the BSE REALTY Index is JAIPRAKASH ASSO. (up 5.00%). The top losers are HOUSING DEV. INFRA (down 0.37%) and DLF LTD (down 0.54%).

DILIP BUILDCON LTD plunged by 6%; BSE CAPITAL GOODS Index Down 0.1% (Today's Market)

May 24, 2018 09:55 AM

DILIP BUILDCON LTD share price has plunged by 6% and its Current Market Price is Rs 1,080. The BSE CAPITAL GOODS is down by 0.06%. The top gainers in the BSE CAPITAL GOODS Index are SADBHAV ENGINEERING (up 1.77%) and MAHINDRA CIE AUTO. (up 1.61%). The top losers are DILIP BUILDCON LTD (down 5.89%) and GE T&D INDIA (down 6.88%).

TATA MOTORS plunged by 6%; BSE AUTO Index Down 0.9% (Today's Market)

May 24, 2018 09:48 AM

TATA MOTORS share price has plunged by 6% and its Current Market Price is Rs 308. The BSE AUTO is down by 0.86%. The top gainers in the BSE AUTO Index are ASHOK LEYLAND (up 1.20%) and EICHER MOTOR (up 0.66%). The top losers is TATA MOTORS (down 5.51%).

Sensex Opens Higher; Capital Goods & IT Stocks Gain (Today's Market)

May 24, 2018 09:30 am

Indian share markets open in green with Sensex trading up by 87 points, while the Nifty is trading up by 26 points.

ZENSAR TECHNOLOGIES at All Time High; BSE IT Index Up 1.6% (Today's Market)

May 24, 2018 09:32 AM

ZENSAR TECHNOLOGIES share price has hit an all time high at Rs 1,345 (up 3.42%). The BSE IT Index is up by 1.61%. Among the top gainers in the BSE IT Index today are ZENSAR TECHNOLOGIES (up 3.42%) and TCS (up 0.97%). The top losers include ORACLE FINANCIAL SERVICES (down 0.08%) and ECLERX SERVICES (down 2.71%).

JET AIRWAYS plunged by 7%; BSE 500 Index Up 0.2% (Today's Market)

May 24, 2018 09:19 AM

JET AIRWAYS share price has plunged by 7% and its Current Market Price is Rs 392. The BSE 500 is up by 0.18%. The top gainers in the BSE 500 Index are NAVNEET EDUCATION (up 6.01%) and KAVERI SEED (up 5.46%). The top losers are JET AIRWAYS (down 6.92%) and ITD CEMENTATION INDIA (down 5.94%).

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May 24, 2018 01:19 PM