Most of the Mining stocks are trading positive today. Ashapura Minechem and Hindustan Zinc are leading the gainers. The government has moved forward on its decision to divest 5% of its stake in Coal India Ltd (CIL). It has selected seven banks to manage the stake sale in Coal India which could raise up to US$ 1.2 bn. The government had raised US$ 3.4 bn through an initial public offering (IPO) of 10 % of Coal India in 2010. If the latest proposed sale goes through, its stake will fall to 85%. This is part of the government's divestment programme to raise Rs 400 bn (approximately US$ 6 bn) in the fiscal year ending next March to plug the yawning fiscal deficit.
The five trade unions that represent the staff of Coal India, plan to strike for three days from September 23 to protest the stake sale. The company's trade unions have said the government had pledged not to reduce its stake below 90%. Coal India is trading down 1.6% today.
Most of the Real Estate stocks are trading positive today after Land Acquisition Bill was passed by the Lok Sabha yesterday. Simplex Infra and Unitech are leading the gainers. The highlight of the bill is that it calls for mandatory consent of at least 70 % of people for acquiring land for Public Private Partnership (PPP) projects and 80% of people for acquiring land for private companies. The bill also proposes compensation which may go up to four times the market value in rural areas and two times the market value in urban areas. It also proposes benefits such as land for land, housing, employment and annuities which may be given in addition to the one-time cash payments for the acquisition of a land. One major positive is that the bill will be applicable retrospectively to earlier cases where no land acquisition award has been made yet. Also in case, land remains unutilized after acquisition, the new bill gives states the right to return the land either to the owner or to the State Land Bank.
The bill has received mixed reactions from the real estate industry. Some are of the view that it will help speed up industrial investment. Industry leaders also believe that the bill will facilitate smooth and clear procedure and also lesser delays in acquiring land for development.
On the other hand, according to Confederation of Indian Industry (CII), the cost of land acquisition is likely to increase by 3 to 4 times. This may make industrial projects unviable. The bill will also have significant impact on real estate companies like DLF, Housing Development & Infrastructure Ltd.(HDIL) and Sobha Developers.