Indian Stocks Gain as Top Court Approves Rescue Plan for Telcos
India stocks were volatile as investors weighed economy’s sharp Q1 contraction against signs of business activity gathering pace.
(Bloomberg) -- Indian stocks rose after the nation’s top court approved a 10-year payment plan for telecom companies to clear combined back-fees worth 1.4 trillion rupees ($19 billion).
The S&P BSE Sensex climbed 0.7% to 38,900.80 in Mumbai, with a 6.5% surge in Bharti Airtel Ltd. helping the gauge break out of a tentative start to the day. The NSE Nifty 50 Index also advanced by the same magnitude. Both measures on Monday capped a third straight month of gains.
The Supreme Court on Tuesday rejected the 20-year payment timeline as proposed by Prime Minister Narendra Modi’s administration and supported by telecom companies, but allowed the government to collect the amount in installments. Shares of cash-strapped Vodafone Idea Ltd. plunged more than 13%.
“The decision to pay dues over 10 years is positive for stocks like Bharti and positive for banks that have huge exposure to the telecom sector,” said Vikas Jain, senior research analyst at Reliance Securities Ltd.
Stocks were volatile early in the session as investors weighed data that late Monday showed the economy shrunk 23.9% last quarter against signs of business activity gathering pace. India has been easing curbs aimed at controlling the spread of coronavirus even as a recent surge in infections weighs on the outlook for recovery.
Equities retreated yesterday as a renewed military scuffle with China along the Himalayan border spooked investors. Meanwhile, a new rule kicked in from today, requiring individuals to put upfront funds or stock against buy or sell orders and penalizing non-compliant brokers.
Foreigners bought a net $6.4 billion of Indian shares last month through Aug. 28, set for the biggest monthly purchase ever. Almost two-thirds of Nifty 50 index-members that have reported quarterly earnings this season have posted results that met or beat analyst estimates. Oil & Natural Gas Corp. is due to post results today.
The yield on India’s 10-year government bonds fell 17 basis points to 5.95% after the central bank stepped up measures to crack down on rising yields, including conducting more Federal Reserve-style Operation Twists. The rupee strengthened 1% to 72.87 per dollar.
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