All Asian stock markets have opened the day on a weak note. Stock markets in South Korea (down 2%), Hong Kong (down 1.7%), China (down 1.6%) and Japan (down 1.4%) are trading in the red with heavy losses. The Indian stock markets have also opened the day on a weak note. Stocks in the auto, banking and metal space are leading the losses. However, FMCG stocks are trading in positive territory.
The BSE-Sensex is trading lower by around 162 points (0.9%), while the NSE-Nifty is down by around 54 points (1%). Midcap and small cap stocks are trading in the negative as well, with both the BSE Midcap and the BSE Small cap indices down by about 0.5% and 0.3% respectively. The rupee is trading at 45.19 to the US dollar.
Steel stocks have opened the day on a weak note with Tata Steel, SAILJSW Steel and Jindal Steel trading lower with significant losses. In a bid to turn around its loss-making steel unit in Europe, Tata Steel plans to invest about GBP 400 m (approximately Rs 29.1 bn) over the next five years. It also plans to lay off 1,500 employees from two of its plants in north England in order to restructure the unit. The job cuts will be mainly in the operational, functional and management positions. A 90-day consultation process would soon commence with affected employees and union representatives. The steel unit which makes long products used in the construction industry has been making losses over the last two years owing to poor demand. In the UK, demand for structural steel is just two-thirds of the 2007 level. The same is not expected to fully recover within the next one year. As a result, Tata Steel has designed a plan to cut costs, focus on products that generate value and improve its ability to respond well to demand changes.
IT stocks have also opened the day with significant losses. The stocks of Tata Consultancy Services (TCS), Patni Computers and Wipro are leading the losses. After a reshuffle in top management, Infosys Ltd now plans to expand its footprint into China. The company has announced plans to open a new campus at Shanghai in China. For this purpose, the company plans to invest between US$ 125 m to US$ 150 m. The new campus would be developed over a period of three years and is expected to have an overall seating capacity of 8,000 employees. As per the management, the Shanghai campus would be the largest overseas software development centre of Infosys. Infosys had incorporated its Chinese subsidiary in 2004. The subsidiary had clocked revenues to the tune of US$ 78 m in FY11. Infosys China already employs 3,300 employees. Infosys has invested US$ 23 m in China till date.