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US crisis weighs on world markets
Fri, 5 Aug 09:30 am

The US stock markets witnessed a heavy sell-off in yesterday's trading session due to the deteriorating economic scenario and the debt crisis in the US. Taking a cue, all stock markets in Asia have opened with heavy losses. Stock markets in Hong Kong (down 4.7%), Indonesia (down 5.2%), Japan (down 3.6%) and Taiwan (down 4.8%) are leading the pack of losers. The Indian stock markets have also opened the day with heavy losses. Stocks in the metal, technology and realty space are facing severe selling pressure.

The BSE-Sensex is trading lower by around 453 points (2.6%), while the NSE-Nifty is down 136 points (2.6%). The midcap and smallcap stocks are in the negative as well with both the BSE Midcap and BSE Small cap indices down by 3% each. The rupee is trading at 44.78 to the US dollar.

Investment and finance stocks have opened the day on a weak note with IFCI, Reliance Capital, Motilal Oswal and Edelweiss Capital are leading with heavy losses. Infrastructure Development Finance Company (IDFC) through its wholly-owned subsidiary IDFC Private Equity is geared to invest Rs 800 m in Green Infra Ltd, a company it had started in 2008. The purpose is to set up renewable power capacity in India. IDFC Private Equity had created the entity Green Infra with the aim of creating one of the largest and independent power producers in India. Green Infra currently has a 164 MW diversified portfolio ranging solar, wind, biomass and hydro. IDFC Private Equity has plans to have the company listed by 2013 and thereafter make an exit in tranches.

Steel stocks have also opened the day in the red with Tata Steel, Bhushan Steel and SAIL facing significant selling pressure. Tata Steel plans to invest 7 m pounds (about Rs 5.1 bn) at is Hartlepool mill in the UK. The purpose of the investment is to improve the welding and the material handling capability. Apart from that, the money will also be used to purchase new cranes, handling equipment and storage at both the mills. The company believes that this will not only improve the quality of the finished product but also enhance customer service. Tata Steel expects the installation and commissioning of the new plant and equipment to happen during the first six months of 2012. From a long term perspective, the company views this investment as a move to retain their position of being a world-leading supplier of pipes and tubes.

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