India stocks up as court OKs rescue plan for telcos

Bloomberg

India stocks climbed after the nation’s top court approved a 10-year payment plan for telecom companies to clear combined back-fees worth $19 billion.
The S&P BSE Sensex traded 1.3% higher at 12:46 pm in Mumbai, with the surge in Bharti Airtel Ltd. helping the gauge break out of a tentative start to the day. The NSE Nifty 50 Index also rises by the same magnitude. Both measures on Monday capped their 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. Bharti Airtel rose as much as 6.6 percent after the verdict while Vodafone Idea Ltd. plunged as much as 25 percent as it struggles with heavy losses and mounting debt.
“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 the sharp contraction in the economy last quarter against signs of business activity gathering pace.
India has begun easing curbs aimed at curbing the spread of coronavirus even as a recent surge in the contagion weighs on the outlook for a recovery after gross domestic product shrank by a record 23.9% last quarter.
Equities retreated yesterday as a renewed military scuffle with China along the Himalayan border spooked investors. Meanwhile, a new rule kicked in that requires individuals to put upfront funds or stock against buy or sell orders and penalizes non-compliant brokers takes effect from today.
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 said it will conduct more Federal Reserve-style Operation Twists. The rupee strengthened 1.1% against the U.S. dollar.