After a weak start, the Indian stock markets are trading in the red during the morning session. Apart from the IT index all sectoral indices are trading below the dotted line.
The BSE-Sensex is down 296 points and the NSE-Nifty is trading down 105 points. The BSE Mid Cap index is trading down 2.2% and the BSE Small Cap index is trading down 1.6% The Rupee is trading at 67.91 to the US Dollar.
IT stocks are trading positive today. Infosys is up 1.7% and Tata Consultancy Services (TCS) is up 2.5%. India's third largest software services provider Wipro will be included in the NSE Nifty Index from September 27th. It will replace Reliance Infrastructure in the index. On April 1st Wipro was excluded from the Nifty due to the demerger of its non-IT business into a separate company Wipro Enterprises. Wipro is trading up 2% today.
In a letter to the Prime Minister of India, Wipro chairman Azim Premji has asked Manmohan Singh to seek US President Barak Obama's intervention to remove the provisions in the proposed US immigration bill that are discriminatory towards Indian IT firms. The United States Senate in June had passed a landmark immigration bill containing provisions on H-1B visas that would badly hit Indian IT companies operating in America. The bill, if it becomes law in the present form, will deal a big blow to Indian IT firms using the guest worker visa (H-1B programme) to win contracts in the US as it requires higher fees and salaries to be paid, thereby reducing the low-cost competitive advantage of Indian IT companies. Currently employee costs are about 40% of Wipro's Revenues. The new bill could increase this cost to 50% of revenues, adversely affecting operating margins for the company.
All PSU banks are facing heavy selling pressure today. Indian Bank and Union Bank are leading the pack of losers. State Bank of India (SBI) announced yesterday that it may merge one of the five associate banks with itself in the current year. SBI has five associate banks State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Mysore, State Bank of Patiala, and State Bank of Hyderabad. SBI has already merged two of its associate banks in the past i.e. State Bank of Saurashtra and State Bank of Indore in 2008 and 2010 respectively. The bank has not identified the merger candidate out of its five associates yet. Also, the bank said that it has requested fund infusion to the tune of Rs 40bn this fiscal from the government. SBI is trading down by 2.9% today.