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Auto & Banking Head the Gains
Thu, 1 Sep 01:30 pm

Indian Indices remained listless during the post-noon trading session amid mixed global cues. Stocks from the auto and banking sectors are witnessing maximum buying interest. While realty & capital goods are leading the losses.

The BSE Sensex is trading higher by 21 points (up 0.1%) while the NSE Nifty is trading higher by 6 points (up 0.1%). The BSE Mid Cap index is trading higher by 0.2% and BSE Small Cap index is trading higher by 0.1%. Gold prices, per 10 grams, are trading at Rs 30,672 levels. Silver price, per kilogram is trading at Rs 44,025 levels. Crude oil is trading at Rs 3,021 per barrel. The rupee is trading at 66.96 to the US$.

Cement stocks are trading on a mixed note with Ramco cements & Prism cement leading the losses. As per a leading financial daily, the Competition Commission of India (CCI), has imposed fines of Rs 67 billion on 11 cement companies for cartelization, while also faulting their industry body for facilitating such a malpractice. Cement companies' trade association, Cement Manufacturers Association (CMA) also figures in the list.

Apart from penalizing the CMA, the CCI ordered all the entities to cease and desist from indulging in any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market.

The CCI order comes in light of a complaint filed by the Builders Association of India. The Commission said the companies and CMA went against the provisions of the Competition Act, 2002, and shared details relating to prices, capacity utilization, production and dispatch. This in turn restricted the output and supplies in the market. The CCI also found the cement companies to be acting in concert in fixing prices of cement.

Accordingly, penalties of Rs 11.5 billion (ACC), Rs 11.6 billion (ACL), Rs 1.67 billion (Binani), Rs 2.74 billion (Century), Rs 1.9 billion (India Cements), Rs 1.3 billion (JK Cements), Rs 4.9 billion (Lafarge), Rs. 2.6 billion (Ramco), Rs 11.7 billion (UltraTech) and Rs 13.2 billion (Jaiprakash Associates Limited) have been imposed by CCI. In addition, a penalty of Rs 7.3 million has also been imposed on CMA.

Reportedly, some of the cement companies are having strong financials and can pay the penalty without getting impacted in a big way. While there are few which have a stretched balance sheet (Subscription Required) and any further cash outflow could impact their profitability in the near term.

Moving on to the news from power sector. As per an article in The Economic Times, Tata Power has signed a letter of intent (LOI) with US-based Javelin Joint Venture for its Strategic Engineering Division (SED) to explore development and production of anti-armor missile system.

Reportedly, the Javelin Joint Venture is a partnership between Raytheon Company and Lockheed Martin. Lockheed Martin is an American global aerospace, defense, security and advanced technologies company whereas Raytheon is American defense contractor and industrial corporation.

The joint-venture will lead (Subscription Required) to co-development and production of the Javelin anti-armor missile system while integrating platform mounts to meet Indian requirements. The system will include using the missile on ground combat vehicles or via infantry or helicopters, said the company. Moreover, it was reported that US side has committed to Tata Power and to the defense ministry that 70% by value of the Javelin would be built in India.

This move comes at a time when the government is working towards having private participation in the defense sector and Make in India initiative.

India was among the top ten spenders on military expenditure in 2015, ahead of countries such as France, Japan and Germany. However, a significant share of the country's defence requirement is still imported. To encourage domestic production of defence equipment, as part of the initiative to boost manufacturing, the government has implemented a number of measures.

Notably, the missile system is fielded by the U.S. Army, the U.S. Marine Corps and has been approved for 15 foreign military sales customers.

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