The benchmark indices in the Indian stock market recouped some of their losses in the past two hours and are now trading flat. Stocks from the realty and capital goods space are trading firm while stocks from IT and telecom space are trading weak.
Energy stocks are trading mixed with Essar Oil and HPCL leading the gains. However, ONGC and Cairn India are trading weak. As per a leading financial daily, the Indian government has referred the US$ 9.6-billion Cairn-Vedanta deal to a panel of ministers. Oil Minister Jaipal Reddy said the group of ministers (GoM) headed by Finance Minister Pranab Mukherjee would consider issues like royalty and cess payment. According to Cairn, royalty should be paid entirely by state run company ONGC. But ONGC says that royalty cost can be deducted from the field's revenue before profit. Apart from royalty payment there is another issue of cess payment which Cairn has been opposing. The Company has already initiated arbitration in this regards. Despite this new hurdle, Vedanta is going ahead with the open offer to shareholders of Cairn India.
This deal is already struggling for getting regulatory approvals for nearly 8 months. The stocks of Cairn India fell by nearly 2 per cent in morning trade. Now, the stock is trading 1% down.
Software stocks are trading mixed as well with Mahindra Satyam and HCL Infosys leading the gains. However, TCS, Wipro and Infosys are trading weak. As per a leading financial daily, major IT (Information Technology) honchos are considering 10-15% salary hike this year. The improved environment in this sector has increased the demand for techies. According to people in the industry, economy is rebounding quicker than expected and there is limited supply of talent.
The increment is going to be lower than it was in the years immediately preceding the global recession as the companies are still taking cautious view. Average salary hike would be in the range of 10-15% and specialized people can have even higher. All this will put pressure on operating margins of the companies in this space. The stocks of large IT companies are trading in the red.