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Indian Markets Skid Southwards
Tue, 23 Feb 11:30 am

After opening the day on a negative note, the Indian indices booked further losses and are presently trading in the red. Sectoral indices are trading on a discouraging note with stocks from the FMCG, banking and capital goods sector witnessing maximum selling pressure.

The BSE Sensex is trading down 183 points (down 0.8%) and the NSE Nifty is trading down 60 points (down 0.8%). The BSE Mid Cap index is trading down by 0.6% and the BSE Small Cap index is trading down by 0.4%. The rupee is trading at 68.63 to the US$.

Stocks in the steel sector are trading mixed with Tata Sponge and JSW Steel leading the gains. As per a leading financial daily, Tata Steel is planning to restructure its domestic business to reduce costs and increase productivity. This is undertaken as poor demand and increased competition from imports have shrunk profits of the company.

The restructuring will take place across all business functions such as human resources, production, transportation, marketing and so on. For this, the company is in touch with all big consultants in India to roll out several cost-cutting and revenue enhancement projects. Big Four firms - EY, KPMG, PwC and Deloitte - have been asked to bid for multiple projects where each one will have a hand in driving the cost cutting initiative. Further, global consultancies such as BCG and McKinsey are also likely to be part of this exercise.

The slowdown in global economy has had a clobbering effect on the steel companies in India. Influx of cheap steel imports from China, Japan and South Korea have hit their profitability. Apart from Tata Steel, companies such as JSW Steel and government-run SAIL have also felt the brunt. Moreover, the worsening situation does not augur well for Tata Steel, whose UK business is already a lossmaking operation for about a decade despite continuous restructuring.

Presently the stock of Tata Steel is trading up by 1.7%.

Software stocks are trading in the red with HCL Infosys and Tata Consultancy Services (TCS) bearing the maximum brunt. In another news, software major Wipro has tied up with Verveba, a telecom network engineering company, for providing advanced mobile radio network optimisation solutions.

Together, the companies will offer solutions to address industry challenges in generating measurable economic value from fast growing, mobile network technology deployments & optimization especially in 4G and single RAN technologies. The partnership will also provide the opportunity to combine the skills and talents of two great network services organizations. The companies also stated that they will work together on business development activities and expanding solutions to the Telecom Service Providers globally.

Wipro is a leading provider of analytics and information management solutions. In its results for the third quarter for FY16, the company reported a 3.1% QoQ increase in sales while net profits were flat sequentially. IT services revenues were up 1.4% QoQ in constant currency terms and 0.3% QoQ in US dollar terms. During the quarter, the Chennai floods as well as the appreciation of the US$ against major world currencies impacted the reported numbers. However, the company's fundamentals remain as strong as before. The analysis of the third quarter results of the company and our latest view can be accessed here (subscription required). Presently the stock of the company is trading down by 1.2%.

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Mar 20, 2018 (Close)