Daily Market View: So far, so good

The first target of 17,100 has been reached; it will be a big struggle to reach the second target of 17,300

The market was up today on strong global cues. The Sensex settled at 17,065, up 142 points (0.8%) and the Nifty ended at 5,119, up 40 points (0.7%). The benchmarks started with a sharp rise supported by strong Asian markets. The market extended gains in mid-morning trade on reports of strong industrial production growth in April. However, it pared some of the gains in the early afternoon session. It recovered afterwards and traded range-bound for the rest of the day. 

Asian stock markets were up on optimism that the global economy could weather Europe's debt crisis after China's exports surged and US jobless claims fell. Key benchmark indices in Japan, China, South Korea, Indonesia, Hong Kong, Taiwan and Singapore were up by 0.3% to 1.7%.

Wall Street jumped on Thursday in response to signs of health in the euro debt markets and as investors accumulated energy shares, crushed in the previous day's sell-off. The Dow was up 273.2 points (2.7%) to 10,172. The S&P 500 was up 31 points (2.9%) to 1,086.8. The Nasdaq was up 59.8 points (2.7%) to 2,218.7.

Back home, industrial output rose 17.6% in April from a year earlier, the strongest since December 2009, helped by buoyant domestic consumer demand, a revival in exports and higher infrastructure spending, data showed on Friday.

Manufacturing production was up 19.4% over the year-ago period. Mining output was up 11.4% and power generation rose 6%. Car sales in India rose an annual 30% in May over the year-ago period. The finance minister termed the industrial output data as "encouraging."

Foreign institutional investors were net buyers on Thursday, purchasing stocks worth Rs244 crore. Domestic institutional investors sold stocks worth Rs105 crore. 

Japan indicated that it would raise taxes and warned on defaulting on its public borrowing. The government plans to compile a medium- and long-term plan for reining in debt by 22nd June at the latest and to limit bond issuance at 44.3 trillion yen ($484.6 billion) in the year to 31 March 2012.

Reliance Industries Ltd (RIL) (up 3%) has announced its sixth oil discovery in the exploratory block CB-ONN-2003/1 (CB 10 A&B), awarded under the fifth round of the New Exploration Licensing Policy (NELP-V) round of exploration bidding. The well CB10A-T1 was drilled to a total depth of 1,500 metres in Part A of the block.

VE Commercial Vehicles, the 50:50 joint venture between the Volvo Group and Eicher Motors Ltd (up 15%), has announced an investment of Rs288 crore in its Pithampur plant for the production and final assembly of Volvo's new global medium-duty engine platform. With this, it will be possible for the Volvo Group to locate most of its production of medium-duty engines to VECV's plant in Pithampur. The new investment in Pithampur will result in an annual production capacity of an additional 85,000 engines.

In addition to production of the base engine itself, the facility in Pithampur will also conduct final assembly of engines for India and all of Volvo Group's global markets with Euro 3 and Euro 4 emission requirements.


RIL buys Infotel Broadband for Rs4,800 crore

As part of the deal, RIL will infuse Rs4,800 crore in the company as fresh equity capital to gain 95% stake. The announcement came within hours of Infotel emerging as the sole winner of broadband spectrum for the entire country for Rs12,872 crore

Mukesh Ambani-led Reliance Industries (RIL) today agreed to acquire Infotel Broadband Services for Rs4,800 crore in a deal that values the Mahendra Nahata group internet service provider (ISP) at about Rs5,000 crore, reports PTI.

As part of the deal RIL would infuse Rs4,800 crore in the company as fresh equity capital to gain 95% stake, the company said in a statement.

Announcement of the deal came within hours of Infotel emerging as the sole winner of broadband spectrum for the entire country for Rs12,872 crore.

This marks Mukesh Ambani group's entry into telecom sector in less than a month of he and his younger brother Anil reaching a truce by ending all the no-compete agreements to enable each other an opportunity to enter and invest in areas hitherto barred under the family settlement reached in 2005 for division of Reliance empire.

RIL will invest Rs4,800 crore by way of subscription to fresh equity capital at par to be issued by Infotel Broadband, the company said in a statement.

The share prices of both HFCL (promoted by Mahendra Nahata) and HFCL Infotel (promoted by son Anant Nahata) today rose by the maximum limit and closed at Rs11.39 and Rs10.14 a share respectively. RIL's shares also surged over 3% to close at Rs1,046.25 a share.

Commenting on the initiative, RIL chairman and managing director Mukesh Ambani said, "We see this as the next wave of value creation opportunity in the wireless broadband space. We believe this will pole-vault India's economy into the digital world at an accelerated pace while creating next generation tools that will enhance productivity and create world-class consumer experiences."

RIL said that BWA services can provide an opportunity to be in the forefront among the countries providing world-class fourth generation (4G) networks and services.

"A single 20 MHz spectrum when used with Long Term Evolution (generally known for 4G technology) has the potential of providing greater capacity when compared to existing communication infrastructure in the country," the company said.

In the BWA space, no other player could bag pan-India spectrum. Bharti Airtel and US-based Qualcom won four circles each, while Aircel bagged spectrum in eight circles.

There are reports that RIL was also talking to a new telecom licencee, Videocon Mobile, for a possible stake in the company. Videocon's share also went up by 0.40% to close at Rs22.20 a share.



Mayank Tomar

6 years ago

This is really a good piece of information Showing how creamy Telecome industry is that Mukesh can't stop himself entering in it .

‘The TV industry needs a self-regulatory body’

Vivek Bahl, creative head, Star India speaks on the challenges facing the TV industry in a discussion with Moneylife

Moneylife (ML): Channels are proliferating, but the revenue models of a number of them seem to be under severe pressure. Can the industry sustain the number of channels that exist now? Do you see any kind of consolidation happening in the industry, as the size of the advertising pie has not really grown?

Vivek Bahl (VB): You know everyone has been saying and questioning whether channels will sustain. I believe a lot of them are not shutting down. I think India is growing so much in terms of population, that there will be products to advertise.

Now slowly the industry is getting regulated, there are big cable companies who have actually started paying channels. So I don't think that there is going to be a 'shake-off' and a lot of channels are not going to shut down.

Advertisers have huge budgets and India is still booming as it is one of the biggest economies in the world-probably the second-biggest economy in terms of growth.

Yes, there have been some channels that were on the verge of shutting down last year (for instance, 9X), but they have still managed to get funding today and they have plans to bounce back and develop new content. Cable money support is (also) helping channels stay on. (However), how long this trend will continue is uncertain and it is definitely not sustainable for a very long period.

ML: Consumers in India, long used to free content, don't seem ready to shell out extra for pay channels. Will this scenario ever change?

VB: It is changing slowly because of the (difference between the) number of people who could afford cable (television) 10 years ago and the number of people who can afford it today-any consumer can afford to pay Rs150 to Rs200 a month for cable today. And now viewers see the potential of seeing so many channels and a whole dose of entertainment, rather than going out for a movie and spending that kind of money. Here they can see all the latest movies that make it to the channels. I think people have started seeing value in this and are shelling out that kind of money. It is not a huge amount, as compared to going to a movie or even going to a coffee shop these days-or even accessing the Internet.

ML: Regulation of TV channels is another important issue, both for news and entertainment channels. Self-regulation is obviously good for the industry, but what are the moves being made towards this by TV channels?   

VB: I definitely don't think there is a role for outsiders like the government to come into TV because they try to impose rules about what should be shown and that is not always desirable for creativity. I don't think people should meddle with creativity. The television industry is responsible enough and we need to have a self-regulatory body like the Advertising Standards Council of India (ASCI) for television. Star TV has pushed the process over the past few months. Recently, (the) top three channels have come together and (have) agreed to set up a body like this-we are in the process of completing the same.

ML: Has satellite TV lived up to its promise?

VB: I think it is still a very young industry. If you actually look at it, the satellite TV industry kicked off in 1992 when Zee was launched. So compared to the international level, it is still a very young, disorganised and a growing industry-which is slowly getting organised. In fact I can see some tremendous changes as I have been here since the beginning, because I was in Zee when they had launched the channel.

People have become more professional in the way they work and even the content has improved. Channels are getting segmented with more professionalism involved.

ML: There have been talks of starting channels which are ad-free in the industry. What's your take on this move?

VB: Channels would love to create something like that, but they will have to become much more transparent. The cable sector is still unorganised and they usually don't pay us. If they earn Rs200 per month, they have to give a network Rs50 per month-but they don't usually pay. If they have, say, 1,000 consumers, they actually show that they have only 100 of them and pay only that amount. If all the money (that should be paid) comes to us, it will make a lot of difference. Our business is to cater to viewers, so if we get a chance to show more content, we would love to do that. I would love to create a show which relies on one-minute ads. We are forced to air eight to ten minutes of ads during our shows. This (ad-free programming) will surely be a wonderful opportunity.


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