Asian stock markets are higher today as investors digested regional earnings reports. The Nikkei 225 is up 1.42% while the Hang Seng is up 0.68%. The Shanghai Composite is trading up by 0.29%. Wall Street ended October on a positive note with the three major indices showing their best monthly gains since February.
Back home, share markets in India have opened the day on a strong note following upbeat sentiments in the other Asian markets. The BSE Sensex is trading higher by 202 points while the NSE Nifty is trading higher by 57 points. The BSE Mid Cap and BSE Small Cap index opened the day up by 0.5% & 0.7% respectively.
All sectoral indices have opened the day in green with banking sector and realty sector leading the pack of gainers. The rupee is trading at 65.09 to the US$.
SBI share price surged 1.6% after the bank reduced its marginal cost of funds-based lending rate (MCLR) for the first time in 10 months by 5 basis points (bps) across tenures. The one-year MCLR at the bank now stands at 7.95%.
Dabur India share price rallied over 6.2% after the company reported consolidated net profit of Rs 3.6 billion in the quarter ended 30 September as compared with Rs 3.6 billion reported in the year-ago quarter. On absolute numbers, its net profit grew just 1.3%.
All the telecom stocks are witnessing buying interest today with only GTL Ltd trading in red. Bharti Airtel reported a 76% fall in consolidated net profit at Rs 3.4 billion for the second quarter. It had posted Rs 14.6 billion in the year-ago period.
Consolidated revenue also declined by around 12% to Rs 217.8 billion (Rs 246.5 billion).
Revenues from India stood at Rs 167.3 billion, a fall of 13% year-on-year (YoY), led by a mobile drop of 17% YoY, the company stated.
However, mobile data traffic grew four-fold in the quarter to 784 billion megabytes (MBs), against (178 billion MBs) in the year-ago quarter. Mobile broadband customers rose 34% to 55.2 million (41.3 million).
Reportedly, the financial stress in the industry continues due to double-digit revenue decline and will be further accentuated by the reduction in interconnection charge (IUC) rates in the next quarter. This will eventually force operator consolidation and exits as we have witnessed in the recent past.
Notably, 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
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 surged 3.6% in the early trade.
Moving on to the news from the IPO space. Mahindra Logistics Ltd.'s Rs 8.3 billion initial public offering was subscribed 0.48 times on the first day of bidding on Tuesday.
The portion reserved for qualified institutional buyers was subscribed 0.35 times the number of shares on offer, while the retail investor portion was subscribed 0.76 times. The non-institutional bidder's segment saw muted demand.
The public issue saw bids for 6.6 million shares were against a total issue size of 13.5 million shares.
Mahindra Logistics, one of the largest third-party logistics solutions provider, works on an asset-light model as it leases vehicles and warehouses rather than owning them. It provides supply-chain management services and people transport solutions.
Further, the third-party logistics solutions provider raised Rs 2.5 billion from anchor investors ahead of its IPO. The company allotted 5.8 million shares to 15 anchor investors at the upper end of the price band of Rs 429 apiece.
Meanwhile, New India Assurance Company's Rs 96-billion IPO is set to open for subscription from today, with a price band of Rs 770-800 per share.
The 120-million equity shares' IPO consists of fresh issue of up to 24 million shares and offer for sale of up to 96 million shares by the government.
IPOs are all the rage in the share markets these days. With new companies listing by the day, all with promises of superior returns.
However, we don't need thousands of IPOs to get rich. That's not how super investors make their fortunes. But a few good IPOs could certainly become the multibaggers in your portfolio in a few years.
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