Most telecom stocks were trading with strong losses on October 24, dragging their sectoral index down by almost 9 percent.
Telecom stocks such as Vodafone Idea plunged 23 percent and Bharti Airtel fell 10 percent on BSE in intraday trade after the Supreme Court on Thursday rejected the telecom companies’ definition of Adjusted Gross Revenue (AGR).
With the judgment, the SC has exposed the incumbent telcos to potential demands by DOT of up to Rs 1.33 lakh crore.
The court has held that all revenues, except for termination fee and roaming charges, will be a part of the AGR. Telcos had argued that non-telecom, non-core revenues should not be a part of the AGR.
The government and the telecom companies were locked in a legal battle in the 14-year-old case over the definition of AGR, on the basis of which the telecom department calculates levies payable by companies.
Around 13:55 hours IST, the BSE Telecom index was 5 percent down at 901.91, with 9 stocks in the red, 2 in the green and 2 unchanged.
Vodafone Idea was the top loser at that time, followed by Tejas Networks, Bharti Airtel and Bharti Infratel.
Benchmark Sensex was 134 points, or 0.34 percent, down at 38,913 at that time.
The equity market was in the red as investor sentiment was roiled by trends of Maharashtra and Haryana assembly poll results. The ruling BJP was on course to win Maharashtra but Haryana was increasingly looking like a hung house.
“It’s not landslide victory for BJP, as expected. This would certainly impact the stock market in the short-term,” said Shrikant Chouhan, SVP-Technical Research, Kotak Securities.
Gaurav Dua, Head, Capital Market Strategy, Sharekhan, also said there was some impact on the sentiment of investors but it will be short-lived.
“BJP’s assembly poll performance will weigh on sentiment for the short-term. The earnings and reforms will remain the major trigger. Earnings, so far, have been mixed and it will have a stock-specific impact,” Dua said.―Money Control