With index heavyweights witnessing selling pressure, Indian equity markets continued to slip but remained just above the dotted line in the post noon trading session. Majority of the sectoral indices are trading negative with consumer durable, FMCG and auto stocks being the biggest losers. Realty, oil & gas and IT are among the few stocks trading in the green.
Majority of the steel stocks are trading in the red with Maharashtra Seamless and Jindal Saw being the major losers. However, Tata Sponge and SAIL are few of the stocks trading in the green. As per a leading financial daily, Tata Steel is setting up a manufacturing facility in joint collaboration at its Brinsworth site in Rotherham (UK) to develop low volume advanced technologies for vehicle manufacturers. The Project - Proving Factory is being set up in joint venture with Productiv (assembly) and core partners MIRA (design verification) and High Value Manufacturing Catapult (design for manufacture and assembly) at a cost of 22 m pounds. The project is being funded by the UK government's Advanced Manufacturing Supply Chain initiative. The Proving Factory has a target of 1,000-2,000 units per product per annum across 10 to 20 products. This project will benefit small high-tech British companies that manufacture low-carbon emission technologies and at the same time enable Tata Steel to provide its expertise in specialty steels and manufacturing and gain access to vital supply chains. The stock is marginally down.
Most of the IT stocksare trading positive with NIIT Ltd and Moser Baer India leading among the gainers. As per the financial daily, HCL Technologies, one of India's leading software service provider, may face some problems as its client Reader's Digest enters into bankruptcy proceedings in the US. Reader's Digest is part of Reader's Digest Association (RDA) and is an iconic brand. RDA is witnessing falling advertising revenue and decreasing subscriptions for its magazines. This is further fueled by increased debt obligations and mounting overhead costs. In February 2009, HCL had signed a seven-year contract worth US$ 350 m with RDA. Reportedly, HCL Technologies has claimed US$ 4.3 m for the services rendered so far. There is likelihood that HCL may have to write off these outstanding receivables. Further, RDA Inc has filed for Chapter 11 in the US Bankruptcy Court. Going forward, if RDA Inc comes out of bankruptcy, HCL will be in a better situation. But if it goes into Chapter 7 (shut down) or gets sold then HCL might lose the contract. HCL is trading up by 1.4%.