After opening the day in green, share markets in India witnessed volatile trading activity throughout the day and ended the day flat. Sectoral indices ended the day mixed, with stocks in the telecom sector leading the gains, while stocks in the consumer durables sector lost the most.
At the closing bell, the BSE Sensex stood lower by 155 points (down 0.4%) and the NSE Nifty closed down by 62 points (down 0.5%). The BSE Mid Cap index ended the day down 2.6%, while the BSE Small Cap index ended the day down by 2%.
Asian stock markets finished in green. As of the most recent closing prices, the Hang Seng was up by 1% and the Shanghai Composite was up by 1.1%. The Nikkei 225 was flat. Meanwhile, European markets too were trading on a negative note. The FTSE 100 was down by 0.3%, The DAX, was down by 0.8% while the CAC 40 was down by 1.1%.
The rupee was trading at Rs 71.52 against the US$ in the afternoon session. Oil prices were trading at US$ 79.5 at the time of writing.
In news from stocks in the aviation sector. According to a leading financial daily, the government is set out come out with a relief package for airlines as the industry is suffering from a double whammy of a falling rupee and rising fuel costs.
As part of the plan, the government seeks 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 privatise 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$80 per barrel and touched its highest level since December 2014. Crude prices have been driven up by production curbs in OPEC nations and Russia, as well as by robust demand on the back of healthy global economic growth.
Oil prices are closely monitored by the Indian air carriers, as aviation turbine fuel is their single largest input cost. A sharp rise in the cost of fuel puts pressure on margins, and consequently an increase in air fares.
Although air travel is becoming the new normal, investors need to understand the industry dynamics before buying up aviation stocks.
In news from stocks in the telecom sector. Newly merged Vodafone Idea Ltd was in focus today after the company raised new funds.
The telecom major raised over Rs 15 billion through non-convertible debentures (NCDs) on private placement basis, taking on its first debt since merging.
The NCDs have maturity period of 5 years and have been offered at interest rate of 10.9% per annum.
Notably, just last week, Vodafone India and Idea Cellular Ltd announced the completion of their US$ 23 billion merger of India's operations to create the country's largest telecom operation in terms of revenue and subscribers.
The merged entity, called Vodafone Idea Ltd and the existing brands of Vodafone and Idea will continue to operate separately.Vodafone Idea is now the country's largest telecom operator - surpassing Bharti Airtel with over 438 million subscribers, and a 37% revenue market share.
It will be interesting to track the progress of the new telecom leader, and whether it can sustain the pole position, in the hyper-competitive telecom industry.
Idea share price ended the day down by 3%.
This article was originally published in English at www.equitymaster.com
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