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Indian indices drift further into the red
Thu, 12 Sep 11:30 am

After a weak start, the Indian stock markets have extended their fall in the morning session. All sectors except Pharma are trading lower with the Banking and software stocks leading the pack of losers.

The BSE Sensex is down 130 points and the NSE-Nifty is trading down 38 points. However, the mid and small cap stocks seem to be witnessing buying interest. The BSE Mid Cap index and the BSE Small Cap indices are trading up by 0.5% and 0.8% respectively. The Rupee is trading at 63.63 to the US Dollar.

Financial stocks are trading mixed today. IDFC and JM Financial leading the gainers while Rural Electrification Corp (REC) and Power Finance Corp (PFC) are among the losers. The Reserve Bank of India (RBI) yesterday has decided to lift restrictions placed on foreign investors for purchasing shares of IDFC. On 23rd August, 2013, the RBI had issued a circular in which it reduced the total foreign investment limit in an Indian company from 74% to 54%. At that time IDFC had asked all custodian banks to not make any purchases in the secondary markets on behalf of their FII and NRI clients. The RBI has now lifted that restriction due to the fact that the total foreign holding in the company has fallen below 54%.

Engineering stocks are trading mixed today. Simplex Infra, Gammon India, Jyoti Structures and Engineers India are leading the gainers, while Jaiprakash Associates and Siemens are leading the losers. In a major boost to Infra, real estate and engineering companies, the government has cleared projects worth Rs 1,200 bn under Delhi-Mumbai Industrial Corridor (DMIC) project. As per a leading daily, a total of nine projects were given a go-ahead by the DMIC Trust. DMIC is an ambitious US$90 bn project; which is aimed at creating mega industrial infrastructure along the Delhi-Mumbai Rail Freight Corridor. Japan is giving financial and technical aid for the project.

The nine projects include several integrated industrial townships, improvement of water supply system, construction of new railway lines, solar power projects and various water desalination projects in states encompassing Madhya Pradesh, Rajasthan, Gujarat, Haryana etc. The timely implementation of these projects will help order inflows of construction and engineering companies which have been suffering due to investment slowdown.

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