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Indian stock markets open weak
Tue, 6 Aug 09:30 am

Barring Indonesia (up 0.4%), the major Asian stock markets have opened in the red with stock markets in Hong Kong (down 1.6%) and Japan (down 1.3%) leading the losses. The Indian stock market indices have also opened the day on a weak note. Barring software, the sectoral indices have opened in the red with stocks in the banking and realty sectors leading the losses.

The Sensex today is down by around 164 points (0.6%), while the NSE-Nifty is down by around 50 points (0.9%). Mid cap and small cap stocks have also opened in the red with the BSE Mid Cap and BSE Small Cap indices down by around 0.8% and 0.3% respectively. The rupee is trading at Rs 61.14 to the US dollar.

Auto stocks have opened mainly in the red with Maharashtra Scooters Ltd and Ashok Leyland Ltd leading the losses. As per a leading financial daily, Bajaj Auto's Managing Director Mr. Rajiv Bajaj has threatened to shift the company's production to plants away from the Chakan plant in case the 42 day old strike is not resolved. Mr. Bajaj has given the top management and union an ultimatum to end the strike in one week failing which at least 50% of production and production capacity will be shifted to Aurangabad and Pant Nagar plants. However, he ruled out the shutdown of Chakan facility saying that the main R&D facility in based in the city. The Chakan plant has a capacity of 3000 units. Mr. Bajaj said that he will not risk the sales loss in second half of the fiscal year and will seek board's permission to move production capacity to other plants. The workers have been demanding a steep wage hike or 500 shares each through ESOP (Employee stock ownership plans).

Mining stocks have opened the day in the red with Ashapura Minechem Ltd and Sesa Goa Ltd leading the losses. As per a leading financial daily, the Coal Ministry has received provisional clearance from the environment and forest ministry and has started groundwork to auction coal blocks. It is important to note here that about 90% of the present captive coal blocks are held up due to lack of such clearances. Also, there is no guarantee about the clearance yet and it is just provisional in nature. Earlier, the Government had decided that it would not allocate any coal block without obtaining green clearances. However, this would have led to delay in the entire process hampering the development of coal dependent sectors such as power, steel and cement etc. These sectors are already suffering since there has been no coal or lignite block allocation for captive use to private companies since October 2008. As per the coal ministry, this development will give some comfort to bidders in deciding about investments. The coal ministry has already circulated the proposal for inter-ministerial consultations, post which it will be placed before the cabinet committee on economic affairs (CCEA). Around four blocks with over 500 million tonnes (MT) of reserves each in the first round of auction. As per the draft proposal, the qualified companies will be slapped with penalty if they surrender blocks without performing detailed exploration, purchasing geological report and submitting mine plan. The firms will also have to secure mining lease from state governments if they bag explored blocks with known reserves.

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