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Banks, FMCG drag indices lower
Thu, 26 Nov 02:30 pm

The benchmark indices on Indian bourses continued to move southwards on account of sustained selling activity witnessed during the previous two hours of trade. Stocks from the banking, FMCG and oil & gas sectors have been the biggest losers while those from telecom and cement sectors have managed to get away with marginal gains.

The BSE-Sensex and the NSE-Nifty are trading lower, down by around 247 points and 78 points down by 1.6% each. The BSE-Midcap and BSE-Smallcap are also trading lower, down by around 1.08% and 0.80% respectively. The rupee is trading at 46.38 to the dollar.

As per a leading business daily, Godrej Consumer Products and Marico have both bid for Simple, which is a leading beauty products company in UK. The deal is said to be worth Rs 19.3 bn. The large deal size has led to speculations that it may be difficult for either of the companies to put up a counter offer in case rival bidders emerge. It may be noted that both companies have recently been on the lookout for acquisition targets in West Asia, Africa and Europe. We believe that the acquisition may entail heavy leveraging and exert significant cash flow pressure on the balance sheets of the companies.

Wipro Ltd, India's third largest IT services exporter had launched its second facility in China. This center will provide IT and back office services to Wipro’s clients globally. The new facility has started operations with 100 employees. Employee count will soon be ramped up to 1,000. It may be noted that Indian companies have recently started targeting the US$ 10 bn Chinese IT-services market which holds a lot of potential to grow further. The Indian IT players like TCS, Infosys and Wipro are new entrants to the Chinese market and have to deal with established global giants like IBM. However, Indian IT majors are able gain in-roads by leveraging the experience of working with large clients in the US and Europe.

Chinese financial sector particularly brings in a sea of opportunity for Indian IT majors as it is yet to make significant investment in technology. As a matter of fact only 10% of the China's banks offer online banking. Further, there is only one ATM machine in China for every 10,400 citizens, while the same is one ATM for every 735 citizens in the US.

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