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IT Stocks Lead the Losses
Tue, 22 Dec 11:30 am

After opening in the red, the Indian indices trimmed losses but continued to trade in the negative territory. Sectoral indices are trading on a mixed note with stocks from the IT, and FMCG sector witnessing maximum selling pressure. Realty stocks are leading the gains.

The BSE Sensex is trading down 31 points (down 0.1%) and the NSE Nifty is trading down 14 points (down 0.2%). The BSE Mid Cap index is trading up by 0.3% and the BSE Small Cap index is trading up 0.5%. The rupee is trading at 66.28 to the US$.

Food and Tobacco stocks are trading mixed with Golden Tobacco and VST Industries leading the losses. As per a leading financial daily, Nestle India has said that it will launch other variants of the brand Maggi noodles such as oats noodles and cup noodles in 3-4 months. Also, the company said that it is ramping up productions at all of its five plants and is also ensuring to reach out to all the distributors.

The development follows the relaunch of Maggi masala noodles which commenced on November 9, after a five months ban by the Food Safety and Standards Authority of India (FSSAI) following a Bombay High Court order. Further to this, the Supreme Court had last week ordered re-testing of Maggi noodles by an accredited laboratory at Mysore.

The company stated that before the ban, Maggi noodles were distributed through 1,500 distributors across country. Presently, the same are sold through 1,000 distributors. The management has stated that it will ramp up its distribution network and recall all 1,500 distributors soon.

Lastly, on sales front, Nestle has sold 50 to 60 million packs of Maggi noodles so far after its relaunch. This is as against 300 to 400 million packs that it used to sell in full year before crisis.

Nestle's Maggi fiasco gathered much steam in stock markets then. Investors owning the stock of the company were worried about this controversial affair. However, does it make sense to dump any stock based on this tumult? One of our articles in 5 Minute WrapUp answers this question. You can read it here. Presently, the stock of Nestle India is trading up by nearly 0.9%.

Banking stocks are trading on a mixed note with Dhanlaxmi Bank and Karur Vysya Bank leading the gains. As per an article in The Economic Times, the Reserve Bank of India (RBI) is working on guidelines for peer-to-peer lending arrangements offered by online platforms. One must note that this kind of lending does not need regulatory approval. Even the lenders do not have to be registered as non-banking financial companies (NBFCs) and can earn returns ranging between 12% and 36%. This builds in a lot of risks in the lending system, especially on account of people who want to borrow money but do not have enough credit history. The RBI has stated that these risks need to be taken into account and plans to bring out a discussion paper soon on this matter for public consultation.

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