BackOpening Bell 19 February | Construction and defence shares will be in focus
Asian markets were trading higher after dovish Fed minutes
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Mumbai: Overnight, US markets ended mixed following a rally in government bonds as the markets interpreted the minutes of the Federal Reserve’s January policy meeting as more dovish than had been expected.
The minutes showed many members of the Fed’s Open Market Committee were concerned that a premature rise in interest rates could hurt US economic growth and the recovery in the labour market, reports Financial Times. Dow Jones Industrial Average was down 0.1%, Nasdaq composite and S&P 500 closed flat.
Asian markets were trading higher after dovish Fed minutes. Japan’s Nikkei Stock Average was up 0.4%, cheering the Sony turnaround plan; Hong Kong’s Hang Seng was up 0.2% and China’s Shanghai Composite advanced 0.8%.
In India, construction shares such IRB Infrastructure Ltd and Ashoka Buildcon Ltd will be in focus after the roads ministry proposed a new hybrid annuity model for road development which deviates from the existing models through reallocation of risks, reports Mint. The new model proposes to cushion road developers from the risk of revenue uncertainty arising from inaccurate traffic projections and divide the financial burden between the developer and the government.
Shares of defence companies such as Bharat Electronics Ltd, Pipavav Defence and Offshore Eng Co Ltd and Bharat Forge Ltd will be in the limelight after Prime Minister Narendra Modi opened a window for majority-foreign ownership if the projects bring state-of the art technology to the country. The announcement is pointing to an important policy shift just months after India raised the FDI limit in the sector to 49%, reports Economic Times. India’s defense ministry said it would also spend $8 billion on new warships.
Hero Group has sold a 3.5% stake in its flagship Hero MotoCorp Ltd to raise funds to diversify into other business areas such as defence. The group sold 7 million shares of Hero MotoCorp for as much as $306 million. There have been reports that Hero Group, besides Mahindra and Mahindra Ltd and a French shipbuilder have started separate discussions with the promoters of Pipavav Defence to purchase a 19% stake in the company.
Telecom stocks will be under pressure as the fight for spectrum may turn out to be far fiercer than expected after it became clear that Bharti Airtel Ltd, Vodafone Plc and Idea Cellular Ltd have readied a war chest much beyond what’s required to just renew their permits. This is after an aggressive Reliance Jio Infocomm threw its hat in the ring, reports Economic Times.
Proceeds from the coal auction have surpassed estimates as six states, including Madhya Pradesh, West Bengal, Maharashtra and Odisha, will gain nearly ₹ 80,000 crore from the 12 coal blocks auctioned by the government till Wednesday, reports Economic Times.
Lastly, millions of Indians are getting online for the first time thanks to ultra-cheap smartphones, and it is translating into surging profits for the country’s biggest cellphone-service providers, reports Wall Street Journal India. Bharti Airtel, Vodafone Group and Reliance Communications Ltd all reported profit increases of more than 50% in the December quarter aided by revenue from mobile data fees.
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