Nifty opens above 8900, Sensex higher; Reliance jumps 5%
Wed Feb 22 2017
Rajesh Sharma (2002 articles)

Nifty opens above 8900, Sensex higher; Reliance jumps 5%

9:53 am Goldman on Jio:Goldman Sachs feels top 10 percent of Indian mobile subscribers will likely view Reliance Jio’s offers as attractive and these top 10 percent subscribers have an average ARPU (average revenue per user) of Rs 600 and account for 40 percent of industry revenues.

Customer concerns around call failure and likely further cuts from rival telecom companies are key hurdles for Jio, it feels while estimating 50 percent customer retention in FY18.

Goldman expects 50 million customers for Jio in FY18 with pre-tax ARPU of Rs 250 driving wireless revenues of USD 2 billion in FY18.

9:42 am FII View: Mahesh Nandurkar of CLSA says with spot steel, oil and coal prices up 15 percent over FY17 average, investor concerns over FY18 margin outlook is rising.

First of all, rising commodity prices negatively impact only 45 percent of MSCI India, he says.

CLSA research team has built in a YoY consensus 70 bps EBITDA margin compression for FY18 for these companies, which is largely driven by petchem, he feels.

Nandurkar says potential further increase in commodity prices and lack of growth recovery would be a key risk to margins and margin assumptions for select staples, autos, cement and durables could be at risk.

9:25 am Auto finance market: The domestic auto finance market, one of the most developed in Asia with 74 percent penetration and with healthy asset quality of under 1 per cent bad loans, is set to double the asset base to Rs 2.6 trillion by 2020, said a report today.

The domestic auto market, the second largest in Asia, is expected to grow at a CAGR of 13 per cent by value between fiscal 2016 and fiscal 2026 to reach USD 300 billion, said the report by EY, adding by 2020, the vehicle penetration in the country is expected to rise by 50 percent.

This huge growth potential provides an addressable opportunity of over Rs 2.6 trillion by fiscal 2020,” said EY India partner and automotive sector leader Rakesh Batra, adding new passenger vehicle financing market stood at Rs 1.6 billion in fiscal 2015.

Also read – Here’s why private banks may have shown interest in Axis Bank

9:15 am Market Check

Benchmark indices gained further in early trade amid consolidation, with the Nifty opening above 8900 level led by Reliance Industries and Tata Motors.

The 30-share BSE Sensex was up 56.82 points at 28818.41 and the 50-shbare NSE Nifty rose 14.05 points to 8921.90. About 522 shares advanced against 238 declining shares on the BSE.

Tata Motors, BHEL, ONGC, Axis Bank, BPCL and Bharti Infratel were early gainers while GAIL, Hero Motocorp, Tata Steel, Infosys, Wipro, Idea Cellular, Aurobindo Pharma and Eicher Motors were losers.

Reliance Industries shares surged 5 percent, the leading driver for the market today, as Goldman Sachs says top 10 percent of Indian mobile subscribers will likely view Reliance Jio’s offers as attractive after the announcement of new tariff plans by Mukesh Ambani, Chairman & Managing Director.

Disclosure: Reliance Industries, the parent company of Reliance Jio, owns Network 18 that publishes Moneycontrol.com.

The Indian rupee opened marginally lower at 66.95 per dollar today against Monday’s close of 66.92.

Ashutosh Raina of HDFC Bank says the USD/INR currency pair continues to hover around the 67/dollar level tracking the global risk on sentiment, with gains getting capped by suspected intervention.

He expects the pair to trade in 66.80-67.10/dollar range for today.

Dollar index rose against a basket of currencies, following hawkish comments from Federal Reserve officials, while european political uncertainty also boosted the dollar.

Markets in Asia traded mixed, despite US gains, as investors await policy details from the Trump administration on tax reforms and deregulation.

US stocks rose to fresh record highs on Tuesday, boosted by strong earnings reports from Wal-Mart and Home Depot and continued optimism about the economic agenda of President Donald Trump.

Rajesh Sharma

Rajesh Sharma

Rajesh Sharma is Correspondent for Stock Market of South East Asia based in Mumbai. He has been covering Asian markets for more than 5 years.

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