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Auto stocks pull down indices
Tue, 20 Mar 01:30 pm

After a firm opening, indices in Indian stock markets have been paring gains in the last two trading hours and went below the dotted line. The sectoral indices are trading mixed. Auto, power and capital good stocks are the biggest losers. Consumer durable and FMCG stocks are among the gainers.

The BSE-Sensex is trading down 24 points and NSE-Nifty is trading down 7 points. Both BSE Mid Cap index and BSE Small indices are down by 0.2% and 0.3% respectively. The rupee is trading at 50.3 to the US dollar.

Mining stocks have been trading mixed with NMDC Ltd and MMTC Ltd. leading the gainers and MOIL Ltd. trading the weakest. As per a leading financial daily, Coal India Ltd. has enhanced its offers for land acquisition. As per the recently approved rehabilitation and resettlement (RnR) policy, the company will offer to farmers an amount of Rs 5 lakh an acre, over and above the price of land. Only those farmers who have not collected their sale proceeds in acquisition cases from 2000 onwards will be eligible for the higher compensation. This is meant to compensate for loss of livelihood with options of annuity income. However, this compensation will not be available to a land seller who chooses to gain employment in CIL. The recent development points to the pressure faced by the company to scale up production. The company needs as much as 60,000 hectares to step up production by 160 mt to 520 mt during the Eleventh Five-year Plan (2007-12). The company's current production stands at 431 mt. The new policy will rely heavily on the State Governments to decide the price of land as in Chhattisgarh, where it is being implemented first. The State Government has notified a price of Rs 10 lakh an acre for industrial usage.

Majority of the automobile stocks are trading negative with Tata Motors (down 3.3%) and Bajaj Auto (down 2%), the biggest losers. Automobile companies that were reeling under slowdown from rising fuel costs and higher interest rates faced yet another salvo in the form of higher excise duty. As per a leading financial daily, Tata Motors has announced price hikes of upto Rs 35,000 on its commercial and passenger vehicle offerings to pass on the 2% increase in excise duty announced in the Union Budget 2012-13. In the passenger car segment, the prices are expected to be raised by Rs 2,000-8,000, whereas the utility vehicle segment will see price hikes in the range of Rs 8,000-35,000.

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