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The US Federal Reserve kept the interest rates unchanged in its meeting on Wednesday. Barring Hong Kong, major Asian stock markets have opened the day on a negative note. Stock markets in Japan and Taiwan are trading lower by 2.5% and 1% respectively. Benchmark indices in Europe and US ended their previous session on an encouraging note. The rupee is trading at 66.54 per US$.
Indian stock markets have opened the day on a flattish note. The BSE Sensex is trading higher by 4 points (up 0.02%) and NSE Nifty is trading marginally higher by 1 point (up 0.02%). Both, BSE Mid Cap and BSE Small Cap are trading higher by 0.4% and 0.3% respectively. Major sectoral indices have opened the day on a mixed note with stocks from telecommunication and banking sectors witnessing buying interest. However, stocks from information technology and FMCG sector are the leading losers in the pack.
Bharti Airtel reported its results for the quarter ended March 2016. Company reported a sales growth of 8.4% YoY. The net profit on a consolidated basis grew by 2.8% YoY, while sequentially profits grew by 15.5%. The growth was on account of healthy volume growth in the data as well as the voice business. Further, even the troubled Africa business reported steady revenue and improvement in margins. The earnings before interest, tax, depreciation, and amortization (EBITDA) grew by 14.3% YoY to Rs 91.8 billion.
Reportedly, in the Indian mobile business, EBITDA grew by 13% YoY on the back of strong volume growth from the voice as well as data business. The voice traffic on the company's network grew by 10.8%. Reportedly, this is the first time the company has reported double-digit in voice traffic growth in at least the last 12 quarters. Further, data volumes too grew at a steady pace of 70%. The data volumes have grown at a similar pace in the preceding three quarters. Further, with the recent acquisition of spectrum purchases, the company is well poised to take on its rival Reliance Jio Infocomm Ltd.
The company also announced a buyback through the tender offer route, which is essentially a tax-efficient manner to return cash to shareholders. The maximum buyback price of Rs 450 per share is at 24% premium against Tuesday's close of Rs 364 on the BSE. The stock is trading up by 2%.
In another news update, government has asked the state run banks to speed up the recovery of their Non-Performing Assets (NPA) in order to get a share of the Rs 250 billion capital infusion by the government. The government stated that the state run banks will have to show some movements on bad assets before they can file petition for the recovery.
Reportedly, the finance ministry is holding meetings with the individual banks on their capital raising plans and how they will be selling their non-core assets. Recovery of non-performing assets (NPAs) will also hold substantial weightage while working out the matrix for capital allocation.
The bankruptcy law holds significance in speeding up the process of recovering bad loans. The government is hopeful to pass the law in the upcoming session in the Parliament. In addition, the government also plans to introduce changes in SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) and DRT (debt recovery tribunal) laws to speed up the recovery process.
Unless there is a substantial improvement in the way the state run banks are managed, it will be the taxpayer who will have to pick-up the final bill of the mess in such companies.
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