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IT stocks drive the gains
Tue, 7 Aug 11:30 am

Indian equity markets built on initial gains during the last two hours of trade on back of buying across sectors. Among sectoral indices, FMCG and oil &gas stocks were the only ones on the losing end.

The BSE-Sensex is up by 103 points and NSE-Nifty is up by 32 points. BSE Mid Cap and BSE Small Cap indices are trading higher by 0.6% each. The rupee is trading at 55.41 to the US dollar.

Steel stocks are trading firm led by Tayo Rolls and Jindal Steel. As per a leading daily, the Jharkhand government has issued a show cause notice to Tata Steel with regards the memorandum of understanding for the purpose of setting up a Greenfield project. The said project which has to be set up in Seraikela-Kharswan district has been delayed. Another memorandum was for the expansion of the brownfield project situated at Jamshedpur. As per the Jharkhand government, Tata Steel has been putting all its efforts towards modernization of the Jamshedpur plant. Tata Steel has already spent Rs 220-250 bn for Jamshedpur plant and expansion work was near completion. Acquisition of land is a problem to set up new facilities, hence the government had allotted a mine to Tata Steel for the greenfield project. Still, the project is delayed.

Mining stocks are trading in the green led by MMTC and Gujarat NRE Coke. According to a leading financial daily, Coal India (CIL) board will meet today to finalise the fuel supply agreements (FSA) with power companies. Earlier in a meeting, the coal mining company's board had reached a consensus on supplying a minimum of 80% of the contracted quantity of the fuel to power firms. It was decided to import coal if need be to ensure these supplies. As a result, CIL will import around 20 million tonnes of coal this year. We may recollect here that last month the prime minister's office had directed the coal giant to sign the pacts with power firms for supply of 65-80% of the contracted quantity. This was to provide support to the troubled power companies. CIL had also been asked to try and ensure supply 75-80% of the assured quantity of coal in the second year under a relaxed penalty clause. In the third, fourth and fifth year, it could be 80% with strict penalty, it was suggested. However, so far only 29 power plants have signed FSAs with CIL.

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