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Sensex Trades in the Green; PSU Stocks Lead Gains
Tue, 18 Apr 01:30 pm

After opening the day on a positive note, share markets in India have continued the momentum and are trading comfortably above the dotted line. All sectoral indices are trading on a positive note. Stocks in the power sector and stocks in the PSU sector are leading the gains.

The BSE Sensex is trading up by 83 points (up 0.3%), and the NSE Nifty is trading up by 15 points (up 0.2%). Meanwhile, the BSE Mid Cap index is trading up by 0.3%, while the BSE Small Cap index is trading up by 0.4%. The rupee is trading at 64.48 to the US$.

In news from stocks in the IT sector. US President Donald Trump is set to sign an executive order that would tighten the process of issuing the H-1B visas and seek a review of the system for creating an entirely new structure for awarding these visas, the most sought-after by Indian IT firms and professionals.

The US$ 115 billion software services sector in the country will possibly have to deal with fresh restrictions as Trump's latest order reinforce the US government's intention to prevent the abuse of the H1B work visa system and said the system should help US companies in hiring highly skilled foreign workers when there is a shortage of skilled employees in the country.

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The order is an attempt by Trump to carry out his "America First" campaign pledges to reform US immigration policies and encourage purchases of American products.

The number of applications for H-1B visas fell to 199,000 this year from 236,000 in 2016, according US Citizenship and Immigration Services.

The executive order that could signed by President Trump would call for the strict enforcement of all laws governing entry into the United States of labour from abroad, for the stated purpose of creating higher wages and higher employment rates for workers in America.

The US opened the window to invite applications for 85,000 H1B visas it plans to issue for 2018.

The latest development comes at a time when there is already an air of protectionism in the global markets. Singapore and the UK are both cutting down on visas to Indians in the IT sector, while also increasingly protecting high-paying computer engineering jobs for locals.

For many Indian companies, Singapore acts as a base for Southeast Asia, while the UK is a regional base in Europe.

An overall protectionism trend is expected to hit the Indian IT firms' bottom line. Especially in the US which accounts for more than 50% of revenues of India's IT majors.

Will Trump Mania Impact IT Companies Revenues from US?

Indian IT companies such as Infosys, Wipro, and TCS could take a hit on their revenues in the short term.

However, we believe that it is unlikely that the companies will substantially bring down their focus on the US. Instead companies may look out for other means to reduce costs or protect margins.

That said, Indian IT companies will also need to rise to Trump's challenges. Fortunately, most were already gearing up for this. Trump may have only accelerated their defense.

So as long as you aren't worried about the revenue guidance in the coming quarters, you need to do just one thing, stay vigilant on valuations.

You never know, the Trump crash may be an opportunity to act on not just IT but lots of other safe stocks as well.

Moving on to news from stocks in the oil and gas sector. State-owned Hindustan Petroleum Corp Ltd (HPCL) in a board meeting today decided to resume work on the Rs 420 billion Rajasthan oil refinery after agreeing on reduced fiscal incentives from the state government.

HPCL had called for an emergency board meeting to clear the revised terms and conditions of the project on Monday.

HPCL, in March 2013, had signed an MoU with the Rajasthan government for setting up the refinery-cum-petrochemical complex in the Thar desert near the oil discoveries made by Cairn India.

The Rajasthan government believed the fiscal package negotiated by the previous government had put a big burden on Rajasthan and that the deal was in favour of HPCL. This led to refinery never taking off as the Rajasthan government put on hold the fiscal incentives for the project.

As per the earlier MoU, the state government wanted to take up 26% stake in the project. In addition, it has also extended a support of US$ 1 per barrel on the purchase of crude oil by the refinery and give discounts to oil marketing companies on refinery gate price.

The cost of the 9 million tonne refinery project, which was earlier pegged at Rs 373 billion is likely to cross Rs 420 billion now.

While the size of the refinery stays the same, the unit will cost more because it should now be built to produce Euro-VI grade petrol and diesel. The refinery will also be the first in the country to produce BS-VI standard fuels.

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Jan 22, 2018 03:33 PM