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Selling pressure drags indices
Fri, 18 Feb 01:30 pm

After opening on a strong note in the morning, Indian indices lost initial ground and are currently trading in the negative territory. While IT stocks are garnering the interest of investors, energy and telecoms tocks are at the receiving end.

Currently, the BSE-Sensex is up by 30 points while NSE-Nifty is trading 3 points below the dotted line. BSE Midcap and BSE Small cap indices are both down by 0.50% and 0.82% respectively. The rupee is trading at 45.20 to the US dollar.

Pratibha Industries is trading higher by 2%. The company has secured a contract of Rs 2,400 m from ONGC for the construction of its corporate office building at BKC, Mumbai. The project is to be executed in 18 months. It also announced a Rs 570 m order from Essel Group company for development of education and research foundation at BKC, Mumbai. This project is to be completed in 21 months. It must be noted that the current order book of the company stands at Rs 36 bn providing revenue visibility for the next 2-3 years. Having said that, execution of these orders will remain the key going forward.

RBI has directed deposit-taking NBFCs to raise their CAR to at least 15% from March 2012. At present the finance companies have to maintain a minimum CAR of 12%. Earlier large financial firms which do not raise public deposits and have an asset base of over Rs 1 bn were asked to step up their CAR to 15% by March 2011. However, the central bank has now decided to align the minimum capital ratio of both the deposit taking as well as large non-deposit taking NBFCs to 15%. This means that the finance companies will now have to bring in more capital to do business. The new rule will apply to NBFCs such as Sundaram Finance, Shriram Transport Finance, Mahindra Finance among others. The financial services stocks were trading mixed with Sundaram Finance and Mahindra Finance trading above the dotted line while Shriram Transport was trading weak.

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