India Telco Stocks Extend Gains After Court Verdict; Sensex Dips

A gauge of Indian telecommunication stocks extended gains after the nation’s top court approved a 10-year payment plan for them to clear back-fees. The benchmark stock index fell slightly.

The S&P BSE Telecom Index climbed 1.1%, set for its best two days since June. The S&P BSE Sensex Index was down 0.3% to 38,770.50 as of 10.42 a.m., while the NSE Nifty 50 Index dropped 0.2%.

The court decision to allow companies including Bharti Airtel Ltd. and Vodafone Idea Ltd. to pay combined back-fees worth 1.4 trillion rupees ($19 billion) over a decade is positive as it will give them cash-flow respite, Nitesh Jain, a director at CRISIL Ratings wrote in a note.

“We expect telcos to hike tariffs to recover the additional liabilities,” Jain said.

Bharti Airtel Ltd., with India’s second-largest subscriber base, climbed as much as 1.5%, extending its 6.5% gain Monday. Vodafone Idea Ltd., the third largest player, climbed as much as 15% after dropping Monday amid uncertainty about its future.

Oil & Natural Gas Ltd. gained 0.9%. While its quarterly earnings report showed a 92% plunge in profit, lower expenses helped cushion the drop, analysts including Dayanand Mittal at Mumbai-based JM Financial Institutional Equities Ltd. wrote in a note.

Of the 48 Nifty 50-listed firms that have announced results so far, 29 beat or matched estimates. Coal India Ltd. is due to post earnings today, leaving Vedanta Ltd. the only remaining company to give its earnings.

The rupee weakened 0.3% to 73.06 per U.S. dollar, while the yield on 10-year government bonds was little changed at 5.95%.

The Numbers

  • Thirteen of 19 sector indexes compiled by BSE Ltd. rose, led by the telecoms gauge
  • Reliance Industries Ltd. gave the Sensex its biggest boost, while Housing Development Finance Corp. was the biggest drag

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