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Indian Markets Trade Flat
Fri, 11 Dec 11:30 am

After opening the day on a flattish note, Indian equity markets continue to trade in a similar fashion. The selling pressure is the highest in telecom stocks.

The BSE-Sensex is down by 45 points and NSE-Nifty is down by 15 points. However, S&P BSE Mid Cap and S&P BSE Small Cap are trading higher by 0.2% and 0.3% respectively. The rupee is trading at 66.79 to the US dollar.

As reported in a leading financial daily, latest version of real estate regulation bill mandates putting aside 70% of the sales proceeds in an escrow account by builders to meet the construction cost. This, experts feel, would curb delays and lead to a more efficient utilization of the funds by the property developers and builders.

However, this provision could impose serious risks in relation to the cash flows of the real estate companies. As they can utilize only 30% of the money acquired, they will have way too less money to endorse and promote their schemes.

To add to this, they can now launch their scheme only once they have got adequate approvals from the appropriate authorities. Previously, developers pre-sold their apartments at lower price points to buyer before obtaining the approvals. This will also put a dent on the cash flows of the real estate firm.

Recently, power sector reforms termed Ujwal Discom Assurance Yojana (UDAY) were introduced. Under this scheme, state governments had an option to take 75% of the loans which appeared on the balance sheet of State Electricity Board (SEB) as on 30 September 2015.

Recently, Chattisgarh government has given its approval to join the scheme. To add to this, states such as Andhra Pradesh, Jharkhand, Rajasthan, Punjab, Himachal Pradesh, Jammu & Kashmir and Uttarakhand have already given their in-principle approval for joining the UDAY scheme.

The scheme aims at providing a relief to the ailing state of the SEBs. To add to this, government is keen to revive this sector wherein the distribution companies owe huge debt to the public sector banks. A default of the same will lead to a huge setback to India's economy in general and the financial sector in particular.

Tanushree Banerjee (Research Analyst), Managing editor of Stock Select recently released a detailed research report on National Thermal Power Corporation (subscription required). In the note Tanushree explains the current scenario of the power sector and how things can turnaround provided the new reforms are implemented effectively. Further, she also explains how NTPC will be the biggest beneficiary once the sector revives. If you are interested in the stock, then this is a must read!

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Nov 23, 2017 09:11 AM