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Indian share markets extend losses
Fri, 24 Aug 01:30 pm

Indian share markets continued to fall in the last two trading hours. Barring FMCG and pharma all the sectoral indices are trading negative with realty, capital goods and banking stocks leading the pack of losers.

BSE-Sensex is down 111 points and NSE-Nifty is trading down 39 points. BSE Mid Cap is down 0.8% and BSE Small Cap index is down 0.7%. The rupee is trading at 55.3 to the US dollar.

All the banking stocks are currently trading in red with IDBI Bank and Oriental Bank leading the pack of losers. Reserve Bank of India (RBI) in its FY12 annual report has said that the total recapitalization cost of the banking system to bring it in line with the Basel-III norms is Rs 1.75 trillion. Out of this the public sector banks controlling 70% of the operations will require equity capital of Rs 1.5 trillion whereas the private banks will require equity infusion of Rs 250 bn. As far as non-equity capital is concerned, the public sector lenders will require Rs 2.7-2.8 trillion whereas private lenders will need Rs 500-600 bn. RBI had formulated the Basel-III norms in 2012 to fortify the banking system against risk of financial collapse. The guidelines will be implemented in a phased manner from March 2013 extending upto March 2018. RBI has said that the implementation of the Basel-III norms would be challenging but manageable.

Majority of the large technology stocks are trading in red with Info Edge and Moser Baer being the biggest losers. Infosys' management is of the view that discretionary spending is showing signs of revival in developed regions such as the US and Europe. However, the management added that the larger deals are taking time to fructify. The management believes that the clients are getting used to the over uncertain environment in the regions. However, the situation in the US has improved as compared to before. The financial services sector (a major chunk of revenues are generated from this sector) still remains a challenging segment for the company as clients are still operating on tight budgets. It may be noted that Nasscom has projected the Indian IT industry to grow by about 11-14% for the current fiscal. Infosys stock is down 1.2%.

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