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Indian Indices Open Flat
Thu, 15 Sep 09:30 am

Major Asian stock markets have opened the day on a negative note with the stock markets in Japan and Singapore are trading lower by 1.3% and 0.6% respectively. Benchmark indices in Europe and the US ended their previous session in red with benchmarks indices in France ending the day lower by 0.4%. The rupee is trading at 66.96 per US$.

Indian stock markets have opened the day on a flattish note. The BSE Sensex is trading marginally higher by 26 points (up 0.1%) and the NSE Nifty is trading higher by 17 points (up 0.2%). Both, BSE Mid Cap and BSE Small Cap are trading higher by 0.1% and 0.2% respectively.

Major sectoral indices have opened the day on a positive note. Stocks from power sector are witnessing maximum buying interest.

As per an article in Livemint, India's top telecom companies have signaled their intent to participate in the upcoming spectrum auction.

The spectrum auction is going to be the largest in India's history. The auction would start from 1 October 2016.

The government could potentially raise Rs 5.66 trillion from this auction. Further, the government is putting on sale spectrum bands of 700MHz, 800MHz, 900MHz 1,800MHz, 2,100MHz, 2,300 MHz and 2,500 MHz. Amongst these, the 700MHz band is the most effective and expensive band.

A 25% upfront will have to be made for all bands under 1000MHz. While, a 50% upfront would be required for 1,800 MHz, 2,100MHz, 2,300MHz and 2,500MHz bands. The balance will have to be paid on two year moratorium and ten year's installment.

In the event of aggressive bidding, the stressed balance sheet of telecom operators (TELCOS) will come under further pressure. Saddled with a huge pile of debt, this additional burden will put profitability under pressure.

In another news update, the corporate debt restructuring (CDR) failure rate rose to 43% at the end of the June from 36% a year ago. In terms of absolute figures, loans worth Rs 972.4 billion had failed at the end of June.

This means that banks have failed to recover around 25% of the loans approved for corporate debt restructuring in the past fifteen years.

The failure rate has increased mainly on account of the loans which had been given to the infrastructure companies. This just goes on to state that the banks were restructuring the loans only to avoid higher provisioning requirement so as protect their bottom-line.

However, since March 2015 banks have gone slow on CDR as Reserve Bank of India (RBI) have mandated that lenders would have to provide as much for a restructured loan as they did for a bad loan.

The recovery of the restructured loans will be the key things to watch out for going forward to gauge the financial health of the banks especially public sector banks.

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May 26, 2017 (Close)

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