Indian stock markets move into the red

Wed, 18 May 01:30 pm

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The Indian stock market indices lost their ground in the last two hours of trade and are now trading in the red. Stocks from the Oil & Gas, PSU and auto sectors are trading weak, while those from the software space are trading firm.

The BSE-Sensex is down 78 points while NSE-Nifty is trading 30 points below the dotted line. Both BSE Midcap and BSE Small cap indices are down 0.7% each. The rupee is trading at 45.07 to the US dollar.

Most of the auto stocks are trading weak with Tata Motors, TVS, Ashok Leyland and Bajaj Auto leading the pack of losers. However, Hero Honda is trading firm. As per a leading financial daily, Tata Motors has five more months to work out a solution to the Singur issue. If it fails to do the needful, the lease agreement with West Bengal Industrial Development Corporation (WBIDC) will be terminated. As per the agreement, the lessor will have the option to terminate the lease if the land remains unused for three years or more, which will be applicable from October 2011. Tata Motors had pulled out of the Nano Project in Singur in October 2008. While the company has paid the rent for the year, no plan for Singur has been communicated yet. At this stage, there is no information if the company will be able to come up with a project by October this year. The Trinamool is not communicating either on the settlement over Singur.

Under the Land Acquisition Act, 1894, land once acquired for a public purpose cannot be returned. However, a new legislation could be passed if Ms Mamta Banerjee sticks to her demand of returning 400 acres, which the erstwhile government pegged at 181 acres. On the other hand, if she climbs down from the earlier demand of returning the land the compensation will need to be increased. This may prove to be very costly as it will have to include 11,000 willing farmers along with 2,000 unwilling farmers.

Construction stocks are trading mixed with BL Kashyap & Sons, Simplex Infrastructures and Pratibha Industries leading the pack of gainers. However, PVP Ventures and NCC Limited are trading weak. As per a leading financial daily, if Lavasa, the hill city project of Hindustan Construction (HCC), withdraws its petition against the environment ministry and applies fresh, its project may get an out-of-turn consideration for approval by the Expert Appraisal Committee (EAC). Among others, the project may benefit from environment ministry's decision to give priority to construction projects with green building ratings. The purpose of the decision is to incentivise companies to integrate green norms into their building plans. The ministry has suggested that the guideline does not intend to serve any specific project and the projects will be considered in the order of applications made. However, the projects may be considered out of turn in case of court directions or if it is in the national interest. The Lavasa project has been under the scanner of the environment ministry for violation of green norms. The ministry had sent a show cause notice to the corporation last year. As many as 257 residential units on 681.3 hectares were under construction when environment minister Jairam Ramesh imposed a stop work order earlier this year.