Sensex Ends at All-Time High; Energy Stocks Top Gainers

After opening the day in green, share markets in India witnessed positive trading activity throughout the day and ended the day at all-time high levels. Sectoral indices too ended the day in green, with stocks in the energy sector and stocks in the banking sector leading the gains.

At the closing bell, the BSE Sensex stood higher by 282 points (up 0.7%) and the NSE Nifty closed up by 75 points (up 0.7%). The BSE Mid Cap index ended the day down 0.5%, while the BSE Small Cap index ended the day down by 0.1%.

Asian stock markets too finished in green. As of the most recent closing prices, the Hang Seng was up by 0.6% and the Shanghai Composite was up by 2.2%. The Nikkei 225 was up by 1.2%. Meanwhile, European markets too were trading on a positive note. The FTSE 100 was up by 0.8%, The DAX, was up by 0.6% while the CAC 40 was up by 0.7%.

The rupee was trading at Rs 68.53 against the US$ in the afternoon session. Oil prices were trading at US$ 74.45 at the time of writing.

In news from stocks in the telecom sector. Bharti Airtel share price was in focus today, after the telecom leader's payments bank - Airtel Payments Bank received renewed approvals from the Reserve Bank of India (RBI).

Notably, the RBI had stopped Airtel Payments Bank getting new customers on board after it allegedly opened savings accounts for existing customers without their express permissions. These accounts allegedly led to government LPG subsidies worth Rs 1.68 billion being transferred to Airtel Payments Bank accounts even as many of the customers weren't aware of that.

However, the RBI has now granted approvals to add new accounts. Also, the Unique Identification Authority of India (UIDAI) has allowed it to use the 12-digit Aadhaar-based e-KYC.

With the objective of deepening financial inclusion, RBI, in 2015 kicked off an era of differentiated banking by allowing SFBs (small finance banks) and PBs (payments banks) to start services. A total of 21 entities were given in-principle nod last year, including 12 for payments banks.

Payments banks can accept deposits from individuals and small businesses up to a maximum of Rs 100,000 per account.

Payments banks aren't allowed to lend but can take deposits, facilitate remittances and dispense payments to recipients. The RBI had devised payments banks and small finance banks as tools to take formal banking to the unbanked.

For telecom companies like Idea and Bharti Airtel, this offered a new business opportunity as they already have extensive networks across the country and a huge potential customer base for the banking services in their existing users.

Telecom Sector: A decade of Underperformance

However, 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 pharma sector. Novartis share price was in focus today after the Indian drug regulator ordered a recall of the company's painkiller drug.

The Drug Controller General of India (DCGI) ordered the withdrawal of the popular diclofenac painkiller injection marketed by Novartis India Ltd and made by Themis Medicare Ltd, following safety concerns raised by a health ministry panel.

The DCG) directed the state drug controller in Dehradun, Uttarakhand, and the drug licensing authority of Daman and Diu to cancel the manufacturing license granted to Themis Medicare for diclofenac sodium injection using Transcutol-P.

Diclofenac injection is marketed by Novartis under the brand name Voveran.

India's pain management drugs market is around Rs 20 billion, of which diclofenac injection is Rs 2.6 crore. As per pharmaceutical market research firm AIOCD Pharma Trac, Troikaa and Novartis together command over 60% market share of diclofenac.

Novartis share price ended the day down 1.6%.