Barring South Korea (up 0.4%), the major Asian stock markets have opened on a weak note with stock markets in Indonesia (down 2.1%) and Malaysia (down 1.0%) leading the losses. The Indian stock market indices have also opened the day in the negative. Barring consumer durables and software, all sectoral indices are opened in the red with the stocks in the banking and realty space leading the losses.
The Sensex today is down by around 224 points (1.2%), while the NSE-Nifty is down by around 69 points (1.3%). Midcap and small cap stocks have also opened in the red with the BSE Mid Cap and BSE Small Cap indices down by around 0.5% and 0.3% respectively. The rupee is trading at Rs 65.36 to the US dollar.
As per a leading financial daily, the Food Security Bill (FSB) finally been passed in the Lok Sabha by voice vote. The bill seeks to entitle around 67% of country's population to subsidized food. As per the bill, around 75% of the rural population and half of the urban population will receive around 5 kg of wheat, rice and coarse cereals at Rs 3 per kilogram (Kg), Rs 2 per kg and Rs 1 per kg respectively. It will have a one year time period for implementation. As per the food minister, the FSB is likely to raise the liability on the exchequer from Rs 900bn at present to around Rs 1,300 bn. Also, the bill will require around 62 million tonnes (mt) of food grain a year. This compares to the average annual procurement of around 60 mt by the government. In essence the Bill will further burden India's weak fiscal situation. In addition to that is the question of its implementation. If the food actually reaches the needy then it would be successful. However considering that the government does not really have a good track record of implementing its populist programmes in the past; we wonder whether this endeavor would be successful or not.
Software stocks have opened the day on a mainly in the green with Wipro Ltd and Tech Mahindra Ltd leading the gains. As per a leading financial daily, Infosys Ltd is likely to reduce the number of overseas employees in order to control costs and boost margins. The company is focusing on cutting down on support functions and could also cut down jobs and move some offshore. The decision will be applicable to US and various other geographies. It is important to note here onsite operations account for more than 50% of company's revenues and 46% of its costs. Also, around 25% of the company's workforce is stationed abroad. The two divisions likely to be most affected by the decision will be marketing and strategic global sourcing. Overall, the move is likely to improve the margins for the company.