Revealed! This is what will decide Bank Nifty direction; Anil Singhvi breaks down triggers

The Supreme Court (SC) hearing on the tenure of the payment of Adjusted Gross Revenues (AGR) by the telecom companies will be a strong trigger for markets today. While the decision will likely have an impact on telecom stocks, it will also have a bearing on shares of banks. Zee Business Managing Editor Anil Singhvi deciphers the triggers and explains the impact of the SC decision. 

He advised investors to trade comfortably before lunch as the decision is scheduled to come at 2 pm.

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AGR पर सुप्रीम कोर्ट का फैसला तय करेगा बैंक निफ्टी की आगे की चाल...अनिल सिंघवी ने कहा- टेलिकॉम कंपनियों के हक में आया फैसला, तो बैंकों को शॉर्ट टर्म के लिए मिलेगी राहत#EditorsTake #AGR #SupremeCourt #Telecom #VodafoneIdea #Airtel @AnilSinghvi_ pic.twitter.com/ig9d88UreQ

— Zee Business (@ZeeBusiness) August 10, 2020

If the SC decision today gives clarity on the future course of action for the telecom companies, it will augur well as the companies would know what they are required to do, Singhvi said. But this clarity will only be a one-time relief, he explained. 

Telecom companies have moved the apex court to seek an extended payment time period for the AGR dues. 

While Bharti Airtel may not have a big problem in paying its dues, the problem stays with Vodafone Idea, Singhvi said. This decision has a stronger bearing on the latter, he further said. Bharti Airtel has already paid around 41 per cent of the AGR dues.  

If a favourable decision comes, it will be a big relief for Vodafone Idea and the banks. Any adverse decision is bad for Vodafone Idea and the banks. 

The best case scenario for Vodafone Idea is that it manages to raise its ARPU (Average Revenue Per User) to Rs 225-Rs 250, turnaround its operational performance and finally, pays its dues in 10-15 years. There are many ifs and buts in this.  

Does the company have the ability to retain its subscribers as the numbers go down on a monthly basis, is a question that requires an answer Singhvi remarked. It could be a one-time relief for Vodafone Idea and the banks but the question still remains on its ability to repay the dues.  

The apex court had earlier indicated that there will not be a reassessment of the AGR dues calculated by the Department of Telecommunications (DoT).

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So, Bank Nifty will likely give the direction for markets today. There is a strong support zone between 21,375 and 21,500. This range is not likely to get deranged unless there is an adverse SC order today, he added.