After opening the day in the red, share markets in India witnessed volatile trading activity throughout the day and ended the day in above the dotted line. Sectoral indices traded mixed, with stocks in the auto sector and stocks in the metal sector, leading the gains.
At the closing bell, the BSE Sensex stood higher by 147 points (up 0.4%) and the NSE Nifty closed up by 52 points (up 0.5%). The BSE Mid Cap index ended the day up 1.2%, while the BSE Small Cap index ended the day up by 0.6%.
The rupee was trading at Rs 71.72 against the US$ in the afternoon session.
Oil prices were trading at US$ 76.45 at the time of writing.
Asian stock markets too finished mixed. As of the most recent closing prices, the Hang Seng was up by 0.1% and the Shanghai Composite was up by 0.4%. The Nikkei 225 was down by 0.8%. Meanwhile, European markets were trading on a negative note. The FTSE 100 was down by 0.6%. The DAX, was down by 0.4% while the CAC 40 was down by 0.3%
In news from the aviation sector. The government is mulling a strategic sale of Air India subsidiary, AIATSL to raise funds and help cut debt.
Strategic sale of Air India Air Transport Service (AIATSL), which provides ground handling services, is being planned as part of the turnaround scheme for Air India which is reeling under a debt burden of Rs 480 billion at end of March 2017.
Earlier it was reported that the government was planning a relief package for the national carrier.
As part of the plan, the government sought to reduce the airlines' costs. In addition, the government also assured the debt-ridden national carrier - Air India of Rs 21 billion in the form of guaranteed borrowing from the government.
In April, the government had invited bids for a 76% stake in Air India, along with a 100% stake in subsidiary Air India Express, and 50% in Air India SATS Airport Services. However, it did not receive any bids since investors were wary of potential government interference as it would retain a 24% stake.
The government eventually dropped the plan to privatize the national carrier.
Indian Aviation Spreading its Wings
Air travel has recorded double-digit growth for 45 consecutive months, thanks to low fares, the addition of new flights/destinations, and overall growth in the economy.
What's foreseeable for India's aviation traffic in 2018 is some pressure on the back of the consistent rise in crude oil prices. Earlier this month, Brent crude oil briefly breached US$80 per barrel and touched its highest level since December 2014. Crude prices have been driven up by production curbs in OPEC nations and Russia, as well as by robust demand on the back of healthy global economic growth.
Oil prices are closely monitored by the Indian air carriers, as aviation turbine fuel is their single largest input cost. A sharp rise in the cost of fuel puts pressure on margins, and consequently an increase in airfares.
Although air travel is becoming the new normal, investors need to understand the industry dynamics before buying up aviation stocks.
Moving on to news from stocks in the IT sector. Tech Mahindra share price was in focus today after the company announced a new strategic partnership.
Tech Mahindra signed a global strategic partnership with Avaamo, a conversational artificial intelligence (AI) company to develop and deliver conversational AI solutions for global enterprises.
Tech Mahindra said it would evangelize Avaamo's enterprise products and build solutions around platforms in areas such as the Internet of Things (IoT), AI, and Machine Learning (ML).
The collaboration will help Tech Mahindra harness newer enterprise AI technologies and serve global markets in countries like the US, Britain, the Netherlands, Germany, Sweden, Malaysia, Israel, Indonesia and the Philippines, among others.
Tech Mahindra share price ended the day down 0.3%.
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