Wipro Acquires Citi Technology, Sensex Falls

123jump.com Staff
23 Dec, 2008
New York City

Stocks in Mumbai dropped 2.4% on the worries that global financial crisis will deepen and foreign investment to India may suffer. The government urged Reserve Bank of India to lower rates further but did not indicate when. Wipro agrees to pay $127 million to acquire Citi Technology Services.

[R]9:50AM New York, 730 PM Mumbai - Government urges RBI to cut repo rate and reverse repo rate by 100 basis points but did not indicate when. Textile industry asks for subsidized loans.[/R]

Market Sentiment

Indian stocks declined led by financials, realty and capital goods sectors.

In Mumbai, the BSE Sensex index fell 2.4% or 241.60 to 9,686.75, and the CNX Nifty dropped 2.3% or 70.65 to 2,968.65.

Of the stocks traded on BSE, 725 rose, 1,752 declined, and 82 were unchanged.

Trading Statistics

Daily turnover on the BSE declined to 3,364 crore rupees from 3,861.10 rupees yesterday.

Government Urges RBI to cut Repo Rate

Economic Times of India reported today that economic adviser to the prime minister Suresh Tendulkar has advised Reserve Bank of India to slash both repo rate and reverse repo rate by 100 basis points.

Tendulkar said GDP growth may drop below 7% this year, while inflation will be between 4% and 6% in the year to March on falling commodity prices.

Textile Ministry Ask for Bailout

The textile ministry has asked prime minister''s office and the finance ministry to provide a bailout package. The industry is looking for subsidized interest rates on loans at 7% and a reduction in duty to 4% and lower margin on loans to 10% from 25%.

Textile minister Shankarsinh Vaghela warned that production is likely to be below the production target in the current year.

“We have recommended a detailed package for the industry. The recommendations are in accordance with the industry demand. Now it is up to the PMO to take a final call on this,” said Vaghela.

Wipro Acquires Citi Technology Services

Wipro Technologies agreed to acquire Citi Technology Services Limited for approximately $127 million. The transaction is expected to complete before March 2009.

Citi Technology employs 1,650 and provides software application services to Citi Group. The purchase of the company also involved a master service agreement for the delivery of software applications and maintenance for six years for $500 million.

Wipro, the second acquisition in as many years comes after the company acquired Infocrossing, Inc for $548 million. Wipro stock in the current year in New York and Mumbai trading has fallen nearly 50% from its peak.

Gainers & Losers

Reliance Industries dropped 1.9% to 1,260 rupees on the news that it may face pressure from the U.S. to stop selling gasoline to Iran.

Banks fell on concern falling interest rates may reduce net interest margins.

State Bank of India lost 0.8%, HDFC Bank slipped 3.9% and ICICI Bank declined 4.3%.
Housing Development Finance Corporation dipped 1.1% after it cut its retail lending rates by 50 basis points yesterday.

Crompton Greaves declined 0.6% on news it has decided to cut capital expenditure on waning demand.

Realty stocks dropped on the reports that property rates will decline between 20% and 25% on a sharp fall in demand in the last nine months for office space, housing and retail malls.

Satyam Computer tumbled 13.6% on speculation its founder and chairman Ramalinga Raju may resign from the board.

Infosys fell 0.4%, Tata Consultancy Services plummeted 2% and Wipro tumbled 1.5% despite the decline in rupee to 48.48 against the dollar from 48.01 yesterday.

Hero Honda Motors rose 0.8%.

Tata Motors plunged 7% on reports the company needs to inject $1 billion to revive Jaguar and Land Rover. Ford Motor sold the two money losing luxury cars at a steep premium and UK labor rates are one of the highest in the world. The automaker may have to trim labor force by 10% in the next six months as sales continue to decline in the U.S. and Europe.

Punjab Tractors declined 3.1% on the reports that it will cut production on three more days this month to avoid inventory buildup.

National Aluminium Company increased 0.1% on signing an initial agreement to sell a 24% stake in its project in Indonesia to United Arab Emirates based RAK Minerals and Metals Investments. Jaiprakash Associates dipped 10.2%.

Chordia Food Products rose 4.9% after receiving regulatory approval to set up a mega food park at Shirwal, Maharashtra.

Godawari Power & Ispat gained 4.9% after its captive power project won 159,926 carbon credits per annum from Germany. Bajaj Hindusthan gained 4.1%.