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Share Markets in India Open Mixed ahead of RBI Policy Outcome
Wed, 4 Oct 09:30 am | Rini Mehta, TM Team

Asian stock markets are higher today as Japanese and Hong Kong shares show gains. The Nikkei 225 is up 0.22% while the Hang Seng is up 0.72%. The Shanghai Composite is trading up by 0.29%. In US, all the stock market benchmarks established new peaks for a second straight session on Tuesday.

Back home, share markets in India have opened the day on a mixed note ahead of the Reserve Bank of India (RBI)'s policy outcome scheduled for later in the day. The BSE Sensex is trading lower by 30 points while the NSE Nifty is trading higher by 4 points. The BSE Mid Cap and BSE Small Cap index opened the day on up by 0.5% & 0.2% respectively.

Except metal stocks and information technology stocks, all sectoral indices have opened the day in green with stocks from oil & gas sector and PSU sector leading the pack of gainers. The rupee is trading at 65.55 to the US$.

Mining stocks are witnessing buying interest today with only Gujarat NRE Coke trading in red. Coal India on Tuesday reported that its half-yearly production during the April-September period for the current fiscal grew marginally by 0.8% to 231.9 million tonnes (mt) as compared to about 230.1 mt produced in the year-ago period.

However, it missed the half-yearly production target of 243.30 mt by 5%. The miner reported that its off-take grew by 8% in the April-September period to 269 mt as against the off-take of about 249 mt in the corresponding period last year.

However, the company achieved 96% of its off-take target of 279.7 mt for the half yearly period of the current fiscal. In September only, its off-take was at 43.6 mt, exceeding the target of 42.3 mt.

Coal India's two subsidiaries South Eastern Coalfields Limited (SECL) and Mahanadi Coalfields (MCL) contributed the majority of its September production by generating 10.13 mt and 9.74 mt of coal, respectively.

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Coal India share price opened the day down by 0.6%.

Moving on to the news from the telecom sector. Bharti Ghana (Airtel) announced that the Ghana's National Communications Authority has given approval for its merger with Millicom Ghana (Tigo) to proceed, subject to some conditions.

According to the company, the merger will result in an entity which will be the second largest mobile network operations in the west African country.

One shall note that, Bharti Airtel and Millicom International had inked an agreement back in March to merge their respective Ghana subsidiaries.

Reportedly, the merged entity will have a 3G licence and 2G licence valid until January 2024 and October 2021, respectively.

Speaking of domestic telecom industry, everything seems to be going wrong for telecom companies at the same time. As if the sharp erosion in tariffs wasn't enough, margins will be hit significantly again by the goods and services tax (GST) and the cut in interconnection usage charges (IUC).

However, the telecom regulator's call to cut interconnect usage charge (IUC) by as much as 57% and scrap it altogether from January 2020, is likely to trigger a sharp jump in Reliance Jio Infocomm's operating margins over the next one year.

This is another blow for industry players, as India has one of the lowest IUC rates in the world. Globally, the IUC rates continue to be gradually phased out.

India has the Lowest Interconnect Usage Charge

The IUC rate cut is expected to adversely impact established players like Bharti Airtel and Idea Cellular.

Going forward, whether these companies will be able to enjoy additional revenues from having a large subscriber base or their profitability and debt servicing capability gets impacted will be the key thing to watch out for.

Bharti Airtel share price opened the day down by 0.9%.

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Mar 16, 2018 (Close)