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The Indian markets had a rather volatile trading session today as the indices oscillated to either side of yesterday's close. At the closing bell, the BSE Sensex stood lower by 29 points, while the NSE Nifty finished down by 12 points. The S&P BSE Mid Cap & the S&P BSE Small Cap also finished down by 0.4% each. Gains were largely seen in metal & <>auto stocks. While, realty and power stocks led the losses.
Asian markets finished mixed as of the most recent closing prices. The Hang Seng gained 0.81% and the Nikkei 225 rose 0.23%. The Shanghai Composite lost 0.72%. European markets are trading mixed today. The CAC 40 is up 0.85%, while the DAX gains 0.42%. The FTSE 100 is off 0.14%.
The rupee was trading at 66.95 against the US$ in the afternoon session. Oil prices were trading at US$ 44.59 at the time of writing.
Bharti Airtel Ltd, Idea Cellular Ltd and Reliance Communications Ltd lost a combined Rs 158.40 billion in market value after Reliance Industries Ltd chairman Mukesh Ambani announced aggressive tariffs for its Reliance Jio mobile phone services. According to Ambani, Reliance Jio Infocomm will sell its 4G internet data at just Rs 50 a gigabyte (GB).
Ambani also announced a 'free welcome offer' for Jio customers from September 5 till December 31. R Jio will offer users data services free for four months, after which it will offer 10 tariff plans starting at Rs 19 a day for occasional users, Rs 149 a month for low data users and Rs 4,999 a month for heavy data users. At the RIL's 42th Annual General Meeting, Ambani said Jio is targeting 100 million users in a shortest possible time.
Reliance Jio plans to cover 90% of India's population by March 2017. The company will introduce 4G handsets at as low as Rs 2,999.
This forces other telcos to change their business model revenue model and the network in use. Bharti Airtel, Vodafone India and Idea Cellular have already slashed effective data tariffs by 67% for prepaid customers.
India's leading telecom companies already have moderate-to-high leverage levels, which will weigh on their participation in the upcoming telecom spectrum auctions slated for October.
Reportedly, Bharti Airtel's financial leverage was 2.4 times in FY16, which is expected to go up in FY17 with the increase in capex and margin moderation due to the intensifying competition in the data segment (Subscription Required).
Shares of Bharti Airtel slumped 6.4%, while shares of Idea Cellular crashed 10.5% to hit a 52-week low of Rs 83.2.
Moving on to news from the steel sector. According to a leading financial daily, SAIL will approach shareholders to allow its Board to make offer to raise funds through private placement of Secured Non-convertible Debentures/Bonds of up to Rs 50 billion. The proceeds will be utilized for modernization programs.
Besides eligible investors, the firm will also approach NRIs, FIIs, Venture Capital Funds, Foreign Venture Capital Investors, State Industrial Developments Corporations, Insurance Companies, Provident Funds, Pension Funds, Development Financial Institutions, among others.
As per the reports, the company has already spent Rs 624.4 billion on expansion program till April 30, 2016. In order to part finance the expansion program, the company plans to borrow about Rs 50 billion during the next year.
SAIL is in process of enhancing hot metal production capacity to 23.46 MTPA and crude steel to 21.04 MTPA under its expansion and modernization program, which is expected to be completed by FY17. SAIL finished the trading day down by 0.5% on the BSE.
Meanwhile, according to an article in The Economic Times, steel companies are planning to raise steel prices in September as sharp surge in input costs by nearly 50% has pushed the firms into a corner.
Between January and August 2016, steel production costs have jumped by almost Rs 5,000 per tonne. The recent hike in railway freight by almost 18-19% have added to their despair.
Faced with threat of cheaper imports, domestic steel firms have sought and received protection through measures like minimum import price, anti-dumping and safeguard duty over the past one year.
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