Indian stock market slipped deeper into the red on the back of profit booking in heavy weights over the last two hours of trade. Stocks from the metals and PSU space are trading weak while stocks from the realty and auto
space are trading firm.
is trading down by 77 points while NSE-Nifty
is trading 26 points below the dotted line. BSE-Midcap
and BSE-Small cap
indices are both trading flat. The rupee is trading at 44.35 to the US dollar.
Steel stocks are trading weak led by Sesa Goa and Adhunik Metaliks. As per a leading financial daily, Group of Ministers headed by finance minister Pranab Mukherjee has approved the draft Mines and Minerals (Development and Regulation) Bill. As per the new bill, coal companies will have to share 26% of their profit with the local population. For iron ore, bauxite and limestone, profit will be shared to the level of royalty paid in the previous year. The bill after receiving approval from the cabinet will be placed in the Parliament. As per industry experts, this bill will be a negative for the mining companies but steel companies will be impacted slightly lesser. Sesa Goa was trading down by 4.3%, while Hindustan Zinc and Sterlite were down by 3.4% and 4.2% respectively.
Cement stocks are trading mixed with Chettinad Cement and Birla Corp trading firm, while JK Lakshmi Cement and Samruddhi Cement are trading weak. As per a leading financial daily, cement companies are delaying their expansion plans due to slowdown in demand. Presently, cement projects worth about Rs 130 bn have been deferred. Moreover, no new clinker capacity has been ordered since April.
Cement demand had been expected to improve from 2012-13 onwards. However, things are not looking favorable now. While the cement industry was expected to grow at 10% annually, for the first two months of this financial year the industry witnessed negative growth compared to 5% growth seen for the same period last year. It may be noted that the present capacity utilization in the cement industry is around 70%. With the existing capacity running below full capacity, cement companies see no reason to invest in capex in the current environment.