Sensex cracks below 29000 as panic, carnage continue SC lashes out at telcos for self-assessing dues

■ SC pulling up telcos, recession fears worsen sentiments

Global recession fears, fresh coronavirus cases and the Supreme Court coming hard on telecom companies led to more panic selling in the equity market on Wednesday. Benchmark indices Sensex and Nifty-50 sank another 5.5 per cent to fresh three-year lows, in line with the massive selling witnessed in the AsiaPacific and Europe regions.

Confirmed coronavirus cases in the country rose to 151, and as the disease was still in the second stage, the next two weeks were crucial in preventing it from spreading to the community level, medical experts said. Globally, the confirmed cases of coronavirus topped 2-lakh mark, with 1 lakh more cases added after March 6, in just 12 days.

The worst affected countries included China (81,000), Italy (31,000) Iran (16,000), Spain (11,000), Germany (9,000), South Korea (8,000) and US (5,000).

The Supreme Court said that the self-assessment of adjusted gross revenue (AGR) dues was in violation of its October 24 order and that all dues must be paid.

After the apex court lashed telecom companies, there was massive selling in blue-chips, particularly banks having exposure to the telecom sector and the telecom stocks that may get hit by court's stance.

It was the worst day for index heavy weights, led by IndusInd Bank (-23.90 per cent), HDFC Bank (9.92 per cent), Kotak Mahindra Bank (-11.23 per cent), HDFC (-7.47 per cent), Bajaj Finance (-11.11 per cent) and Hero Motocorp (-7.86 per cent), on the BSE.

Reliance Industries also fell 3.97 per cent while ICICI Bank lost another 2.96 per cent after massive 8.92 per cent fall in the previous session.

The Sensex closed 5.59 per cent, or 1,709.58 points, down at 28,869.51 while the Nifty-50 fell 498.25 points, or 5.56 per cent, to 8,468.80. Investors lost another Rs 5.98 lakh crore as BSE's market capitalisation fell to Rs 1,13,53,329.30 crore as against Rs 1,19,52,066.11 crore crore on Tuesday.

Telecom stocks that fell sharply included Bharti Airtel (-6.14 per cent), Bharti Infratel (-22.62 per cent) and Vodafone Idea (34.85 per cent).

The only saving grace was big value buying seen in PSU stocks in late afternoon trade. The PSU stock that gained included ONGC (9.83 per cent), Punjab National Bank (6.52 per cent) and Bank of India (2.37 per cent) while SBI closed flat at Rs 214.65, down just 0.12 per cent.

Arun Kumar, market strategist, Reliance Securities, said, "The Nifty 50 hit a new three-year low by surpassing last Friday's low of 8,556. Though, the index is highly oversold on near-term basis, market technical displays incremental pain. The next significant support falls around Nifty-50's historical support in the zone of 7,890 - 8,000."

Analyst said volatility index India VIX, which hit 12 year high of 64.57 on Wednesday, was still indicating wild market movements in the near future and no predictable range for the benchmarks. S Ranganathan, head of research at LKP Securities, said, ''What we witnessed today in our markets was truly unnerving to every investor as our market cap to GDP virtually touched 2008 global financial crisis lows."

The Supreme Court on Wednesday pulled up the telecom service providers (TSPs) for undertaking the self-assessment, or reassessment, of the adjusted gross revenue (AGR) dues decided by its October 24, 2019 judgment and took exception to articles appearing in the newspapers relating to AGR concealing the truth.

In a warning to the top echelons of the TSPs, a bench headed by Justice Arun Mishra, and comprising Justices Abdul Nazeer and M.R.Shah, said all the managing directors of telecom service providers would be made personally responsible and hauled up for contempt if any such write-up concealing truth appeared in future.

Telling in an unequivocal terms that amount decided by its October 24 judgment was final, the court described as "fraud" the TSPs carrying out selfassessment of their respective AGR dues.

"We will be party to fraud if we allow selfassessment of AGR dues by telecom companies," the court said, making it clear that it cannot permit encroachment of its powers by allowing selfassessment by TSPs.

Expressing its displeasure over the way its October 24 order, directing TSPs to pay outstanding AGR dues of Rs. 92,000 crore, was sought to be scuttled, the court deferred, by two weeks, hearing on the Centre's rescue plan to give service providers a window of 20 years to pay AGR dues in annual installments coupled with interest.

"The time-frame of 20 years is unreasonable. The telecom companies have to clear all dues mentioned in the judgment," the court said noting that till other day, when the matter was argued before it leading to October 24 judgment, the Centre had "fought tooth and nail for levying interests and penalties."

The desk-officer of the department of telecommunications (DoT) was again in trouble as the court said it would summon the secretary, DoT and desk officer for permitting the TSPs to carry out self-assessment of their respective AGR dues.

In the last hearing of the matter DoT's desk-officer invited the wrath of the top court for issuing a communication on January 23, that had said that no coercive action be taken against the service providers for not complying with the court's October 24 order.

A Bloomberg report said the ruling could send Vodafone Idea into bankruptcy. It now leaves few options for Vodafone Idea, which owes $4 billion -- of which the carrier has paid about $930 million. It also comes as a disappointment to rival Bharti Airtel, the other survivor of a brutal price war sparked by the entry of Reliance Jio Infocomm in 2016.

While Bharti Airtel has raised funds to meet the payment demand by way of rights issue of shares and bond sales, Vodafone Idea has pinned its hopes on a relief package. UKbased Vodafone, which owns about 45 per cent of the local venture, has signalled its reluctance to plow any more money.

Shares of Vodafone Idea plunged 35 per cent and Bharti Airtel fell over 6 per cent.