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IT stocks lead the downfall
Tue, 18 Oct 11:30 am

Indian stock market indices are trading weak over the last two hours of trade. All sectoral indices are trading in the red. IT and realty witnessed maximum selling pressure.

The BSE-Sensex is down by 289 points, while the NSE-Nifty is down by 89 points. BSE Mid Cap and BSE Small Cap indices are down by 1.17% and 1.02% respectively. The rupee is trading at 49.07 to the US dollar. Software stocks are trading weak. Tata Consultancy Services (TCS) and Hindustan Computers Limited (HCL Tech) are the biggest losers.

According to a leading financial daily, National Institute of Information Technology (NIIT), an IT training company has sold its online learning products business unit ElementK to Ireland's Skillsoft for USD $110 m in an all-cash deal. The company will use the proceeds to pay its debt and bring down the interest burden of the company. The company decided to sell the business unit because of ongoing uncertainties in the macro economy as well as muted growth of 5% achieved by ElementK in the last 5 years. NIIT had acquired ElementK in 2006 for USD $36 m. The acquisition was fully funded through debt. With the sale of ElementK, NIIT will now focus on individual learning solutions (ILS) which will fetch better margins for the company.

Power stocks are trading in the red. Rel Infra and GVK Power and Infra are the biggest losers while Torrent Power and National Thermal Power Corporation (NTPC) are the biggest gainers. According to a leading financial daily, employees unions of world's largest coal miner Coal India have withdrawn their proposed 3 day strike after the management agreed to give higher bonus, along with Rs 1,000 as Diwali gift. The company will pay workers unions a higher Rs 20,000 bonus to each worker instead of earlier announced Rs 17,000. The higher bonus would put an additional burden of around Rs 1.44 bn on Coal India taking the total expense on account of bonus up to Rs 7.5 bn. The workers had earlier gone on 1 day strike which resulted in production loss of around 1 m tonne for the company, resulting in a revenue loss of about Rs 1.4 bn.

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