Wipro share auction raises $150 Million - results only half of target

A trust controlled by Wipro's (WIPR.NS) billionaire founder Azim Premji raised $150 million in an auction of the Indian software company's shares, roughly half of the target, clouding the outlook for a newly approved stock auction process.

Wipro, India's third-largest software services exporter, is the first private sector company to tap the share auction route that was approved in January and was aimed at avoiding expensive roadshows and saving time on secondary share sales.

The share sale came two weeks after state-run Oil and Natural Gas Corp's (ONGC.NS) chaotic $2.6 billion offering fell short of the government's target to sell a 5 percent stake in the company as part of its divestment programme.

"It's shocking that a $300 million book for a company like Wipro doesn't even get fully covered. It's less to do with investor appetite and more to do with the process itself," said a senior equity banker at a U.S.-based bank in Mumbai.

Bangalore-based Wipro (WIT.N), which is also listed in New York, sold 17.8 million company shares for about 7.5 billion rupees in the auction to fund its non-profit arm, said a statement from the founders' trust late on Wednesday.

Up to 35 million Wipro shares were offered in the auction that could have raised roughly $300 million at the floor price of 418 rupees a share, which was a discount of 4.5 percent on its close price of Monday when the plan was announced.

A total of 24.8 million bids were received in the auction, the exchange data showed earlier. Many bids were rejected as their price was below the cutoff level, said a source with knowledge of the deal.

The floor price was disclosed after the close of the auction process. The Wipro share auction started at 9:15 a.m. (0345 GMT) and closed at 1:30 p.m.

"The duration of the auction process has to be increased and bids should be accepted overnight so that many overseas bidders can also participate," said the banker, declining to be named as he was not authorised to speak to the media.

Analysts said investor sentiment for the Wipro auction was also dented by "blind bidding," with the company opting to disclose the floor price, or the threshold below which the bids would not be accepted, only after the close of the auction.

In January, Securities and Exchange Board of India gave permission to shareholders of the country's top 100 companies by market value to raise funds by auctioning their stakes via stock exchanges.

Wipro shares ended 1.1 percent lower at 426.05 rupees, after falling as much as 2.2 percent, while BSE Sensex closed 0.6 percent higher.

REDUCING STAKE

Founders of listed Indian companies can also tap the auction route to pare their stakes to meet the capital market regulator's directive of maintaining at least 25 percent public shareholding.

Premji and his family own about 79 percent of Wipro through various units that include the Azim Premji Trust, which sold the shares on Wednesday. The founders' stake will drop by roghly one percentage point to about 78 percent after the auction.

Proceeds from the share sale will be used to finance the education activities of the Azim Premji Foundation, a non-profit unit set up by Premji to improve the quality of education in the country, a company statement said on Monday.

Wipro, which develops software applications, integrates IT systems and manages call centres, is India's 11th most valuable company with a market capitalisation of more than $21 billion. It is part of India's $76 billion software services industry.

Citigroup Inc (C.N), Morgan Stanley (MS.N), UBS (UBSN.VX) and Credit Suisse (CSGN.VX) were hired by Wipro as brokers for the share auction process.

The BSE Sensex is up 16 percent so far this year, which has helped revive the moribund equity offerings. The benchmark had fallen nearly 25 percent last year, forcing many companies to shelve their share sale plans.

More than $5 billion has already been raised in India share sales so far in 2012, more than half of roughly $9 billion in all of 2011 from 84 issues, Thomson Reuters data showed.

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Cisco Systems to Acquire Optical Networker Lightwire for $271m

The deal, which is expected to close in April, is a clear indicator that Cisco intends to continue to invest in optical networking products to improve its network switches.

Cisco Systems, hot on the trail of ways to improve the innards of its switches and routers, revealed Feb. 24 that it has acquired high-speed networking hardware maker Lightwire for $271 million in cash.

The deal, which is expected to close in April, is a clear indicator that Cisco intends to continue to invest in optical networking products to improve its network switches.

This is the second significant optical IT acquisition the world's largest networking company has made in less than two years. Cisco completed its acquisition of coherent optical transport technology provider CoreOptics in July 2010.

Santa Clara, Calif. and Allentown, Pa.-based Lightwire was the first to develop a proprietary process to make a new breed of high-speed optical transceiver -- a chip that is used to transmit data along a precise beam of light. These processors are smaller and use less electricity than standard chips, and Cisco will use the efficiencies to make its switches capable of carrying higher volumes of data at lower cost.

Lightwire's secret sauce is called CMOS-based (complementary metal-oxide-semiconductor) optical transceiver technology.

"We believe Cisco's increased acquisition activity in the optical component space is tacit recognition that optical technology will continue to gain importance in carrier networks, likely somewhat at the expense of the routing market," analyst George C. Notter  of Jefferies & Company, Inc. said in a media advisory. "We view the acquisition as a potential long-term negative for Finisar."

Finisar is a longtime supplier of non-optical transceiver components to Cisco.

"Of course, Cisco is a critically important customer for Finisar, contributing more than 10 percent of total company revenues in FY11 and 22 percent in FY10. While we expect it will take some time for Cisco to integrate and leverage Lightwire's technology, it seems to us that Cisco could be seeking to vertically integrate to some degree in optical -- a negative for transceiver suppliers like Finisar," Notter wrote. 

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Citigroup raises $1.9 bn by selling stakes to HDFC

US banking giant Citigroup sold its nearly 10-per cent stake in India's biggest mortgage lender for $1.9 billion on Friday, ending a seven-year alliance and raising much-needed capital.

Citigroup, the third-largest US lender by assets, said the sale of 145.3 million shares in Housing Development Finance Corp (HDFC) -- the whole of its 9.85 per cent stake -- was "part of Citi's ongoing capital planning efforts."

Total proceeds from the sale to mainly foreign institutional investors were expected to be $1.9 billion, resulting in an after-tax gain of $722 million.

"We are pleased with the results of our investment in HDFC," said Pramit Jhaveri, Citi India's chief executive, in a statement.

The sale came as Citigroup faces a potential multi-billion-dollar writedown of its minority stake in Morgan Stanley Smith Barney brokerage.

"It's obvious Citi needed money and HDFC is an attractive asset they had," said Santosh Singh, a financial services analyst at Espirito Santo Securities.

Citi may also have sold its stake to raise funds to help it conform to strict new global capital adequacy rules that will require lenders to keep higher reserves to absorb financial shocks, analysts said.

Other global banks such as HSBC and Goldman Sachs have been selling Asian assets not regarded as "core investments" ahead of the new global Basel III capital adequacy rules that come into effect next year.

"Foreign banks are freeing up their overseas investments" to improve their capital base, said Jigar Shah, head of research, Kim Eng Securities.

HDFC's stock plunged over six per cent to a day's low of 665.30 -- to bring shares broadly in line with the price at which Citi sold its stake. The shares later retraced to close down 3.45 per cent at 676.20 rupees.

Analysts called the fall a "kneejerk" reaction that did not reflect HDFC's fundamental value. HDFC, one of India's best-known blue-chip stocks, pioneered housing finance in India in the 1970s and has witnessed rapid growth.

The sale coincided with a sharp rally by India's stock market which several foreign investors have seized on as a chance to sell their stakes in Indian financial institutions and realise profits.

Earlier this month, Carlyle Group LP sold 1.3 per cent of its stake in HDFC for about $270 million. Also this month, a unit of Singapore state investment company Temasek Holdings sold nearly 40 per cent of its holding in India's ICICI Bank for $300 million.

But Ravi Trivedy, a partner at KPMG India, said foreign investors remained "deeply committed" to India's financial services sector even with a lack of expected reforms by Prime Minister Manmohan Singh's Congress-led government.

"Some of these blue-chips (like HDFC) are the toughest to buy into," Trivedy said.

Citi's HDFC stake purchase in 2005 marked the first major move by a US bank into India's domestic banking sector and was seen by observers as a foreign endorsement of the market's potential.

But it was unable to transform its stake into a strategic investment and profit from HDFC's wide customer base to promote its products or become a player in India's real estate market amid a tight regulatory environment.

The New York-based banking group will still offer its investment banking to credit cards services separately in India through its own name. It employs nearly 8,000 people at Citi branches across the country.

"The capital requirement of American banks has been increased and because Citi needs to shore up its capital, they sold their stake," HDFC vice chairman Keki Mistry told NDTV. "The good thing is the demand for such a large issue was high."

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Chinese retailers stop Apple iPad sales as Proview threatened Apple with $2 Billion lawsuite Dispute

Chinese retailers have stopped sales of Apple's iPad as the trademark dispute between Apple and the China-based tech company Proview intensified.

Suning, the country's leading electronics seller, said Friday it was halting sales of iPad, following similar actions by major online shopping sites like Amazon.cn and 360buy.com.

At a press conference Friday, Proview restated its ownership of the iPad trademark in China and asked domestic retailers to stop selling Apple's tablet computer, Shanghai Daily reported Saturday.

Apple, which lost a court ruling in Shenzhen recently, must stop selling the iPad or pay more than 10 billion yuan ($1.59 billion) to Proview if it loses the final court rulings in China, industry insiders said.

Apple China declined to comment Friday after a statement released earlier this week saying that Apple acquired Proview's rights to the iPad trademark in a number of countries and regions, including China's mainland.

Proview, which is deeply in debt, hopes via its lawsuits to lift the possible trademark transfer value, according to research firm Analysys International. The transfer value is expected to be more than 10 billion yuan.

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Apple Loses China Smartphone Market Share in Q4 - a Tough Nut to Crack

The Chinese market has proven a particularly tough nut to crack for Apple. Overall, Apple has had an amazing year: they sold more iOS devices in 2011 than Macs in 28 years. In the last quarter of 2011 Apple’s iPhone business alone generated more revenue than Microsoft’s entire business. The iPhone even surpassed OS X in web market share in the last quarter. And yet, in the country where the iPhone is actually built, China, Apple’s share of the smartphone market fell.

In fact, Apple fell from fourth place to fifth place in the Chinese smartphone market. Chinese-based ZTE Corporation passed Apple to take fourth place in the world’s largest mobile phone market. The top three spots are occupied by Samsung, Nokia, and Huawei Technologies, another Chinese-based company.

Much of Apple’s difficulty apparently stems from the cost of the device, which is as much as two months’ salary for many Chinese workers. Apple’s market share in China fell from 10.4 percent in the third quarter of 2011 to 7.5 percent in the fourth quarter. The iPhone is currently only available through one Chinese mobile carrier, China Unicom, though Apple reportedly is working to bring the iPhone to China Telecom, the country’s smallest mobile carrier.

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Zynga shares fall, Users growth slows - incurring Losses

Online game maker Zynga Inc. reported a net loss for the last three months of 2011, weighed down by hefty stock-compensation expenses and other costs in its first quarter as a public company.

Its adjusted earnings and revenue inched past Wall Street’s expectations, but that wasn’t enough to lift the stock of the company that is behind the most popular games played on Facebook. Zynga’s stock fell 6 percent in after-hours trading following its report.

San Francisco-based Zynga said Tuesday that it lost $435 million, or $1.22 per share, in the fourth quarter. That’s down from earnings of $16.1 million, or 5 cents per share, a year earlier when it was still privately held.

Adjusted earnings were 5 cents per share in the latest quarter, surpassing Wall Street’s expectations by 2 cents. This figure excludes one-time items, including $510 million in stock-compensation expenses triggered by Zynga’s initial public offering of stock in mid-December.

Revenue rose 59 percent from a year earlier to $311 million as Zynga grew its user base, ad revenue and the money it makes from games such as “CityVille,’’ “FarmVille and “Zynga Poker.’’ On average, analysts surveyed by FactSet were expecting $302 million.

Investors may have been hoping for more. Zynga’s revenue climbed just 1 percent, compared with the third quarter. In contrast, its revenue grew by double-digit percentages from one quarter to the next for the year’s first three quarters.

Zynga’s IPO raised $1 billon, at the time the largest IPO by a U.S. Internet company since Google’s in 2004. Facebook, though, is expected to dwarf both when it goes public in the next few months. The world’s largest online social network plans to raise $5 billion in an IPO that could value the company at $100 billion. In comparison, Zynga’s market capitalization was about $10 billion as of Tuesday.

Zynga relies on its Facebook games for nearly all of its revenue, though it has been working on expanding to other areas, notably mobile devices. “Words With Friends,’’ a Scrabble-like game played mainly on smartphones, is one of its best-known titles. Of the 12 games Zynga launched last year, eight were for mobile devices.

The company said it had 54 million daily active users in the fourth quarter, up 13 percent from 48 million a year earlier.

“Zynga set new records in the year in terms of audience size, revenues and bookings,’’ CEO Mark Pincus said in a statement. “We saw great momentum in mobile and advertising and ended the year with a strong pipeline of new games.’’

For all of 2011, Zynga lost $404 million, or $1.40 per share, down from earnings of $27.9 million, or 11 cents per share, in 2010. Revenue nearly doubled to $1.14 billion from $597 million. The company ended the year with 2,846 workers, 92 percent more than at the end of 2010.

The company expects adjusted earnings of 24 cents to 28 cents in 2012. Analysts are forecasting earnings of 23 cents per share.

Getting no love from investors on Valentine’s Day, Zynga’s stock fell 77 cents, or 5.4 percent, to $13.48 after hours. It closed up 93 cents, or nearly 7 percent, at $14.35 before the earnings report.

The shares have ranged from $7.97 to $14.44 since their debut at $10 in December.

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Google, Facebook,Yahoo face possible forex violation probe in India says report

The Wall Street Journal has reported that India's federal finance ministry, which tracks foreign exchange transactions and money laundering activities, have sent notices to the local branches of Google and Yahoo, according to an unnamed senior official. The Web companies are being investigated for potential foreign exchange violations, the source added.

A Google India spokesperson pointed out that it had not received the notice and was not able to comment on specific details. Yahoo India declined to comment, said the report.

The Google spokesperson also told WSJ: "We have an obligation to our shareholders to set up a tax efficient structure and our present structure is compliant with the tax rules in all the countries where we operate...We make a very substantial contribution to local and national taxation and provide employment for close to 2,000 people in India."

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Facebook all set to file for $5 billion IPO today - IFR

Facebook is expected to submit paperwork to regulators on Wednesday morning for a $5 billion initial public offering and has selected Morgan Stanley and four other bookrunners to handle the mega-IPO, sources close to the deal told IFR.

The company founded by Mark Zuckerberg in a Harvard dorm room in 2004 picked Morgan Stanley to take the coveted "lead left" role in what is expected to be the largest IPO ever to emerge from Silicon Valley.

The other four bookrunners are Goldman Sachs, Bank of America Merrill Lynch, Barclays Capital and JP Morgan, although the underwriting syndicate could be expanded later, IFR cited the sources as saying.

Facebook declined to comment. "Lead left" refers to where the top underwriter's name will appear on the IPO prospectus.

Morgan Stanley's experience in arranging major Internet IPOs - including those of Groupon and Zynga - helped it clinch a pivotal role after an unusually secretive selection process, IFR reported.

Final pricing would not be set for several months, during which the size of the IPO could be increased should investor demand warrant it, IFR added.

The prospective IPO - expected to be one of the largest U.S. market debuts in history - has whipped up a frenzy of investor and media speculation this month, buoying shares in social media peers from RenRen to LinkedIn and igniting fierce competition on Wall Street.

The IPO - a prized trophy for any investment bank - likely set a new standard for how low its arrangers are willing to go on advisory fees to win big business, analysts say.

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Facebook may file IPO next week reports Wall Street Journal

Facebook may file papers for an initial public offering next week that would value the social network at up to $100 billion, The Wall Street Journal reported Friday.

The newspaper, citing people familiar with the matter, said Facebook could file IPO papers with the US Securities and Exchange Commission (SEC) as early as Wednesday but the "timing is still being discussed."

It said the Menlo Park, California-based social networking giant is looking at a valuation of $75 billion to $100 billion and is close to picking Morgan Stanley as the lead underwriter for the stock offering.

The Journal quoted its sources as saying that Facebook's IPO could raise as much as $10 billion, making it one of the largest ever.

With a deal size of $10 billion, Facebook would slip into sixth place on the list of largest US IPOs between AT&T Wireless Group ($10.62 billion) and Kraft Foods ($8.68 billion), according to Renaissance Capital.

A market capitalization of $100 billion would put Facebook on a par with McDonald's ($101 billion), well ahead of Boeing ($56 billion) but behind Apple ($415 billion) and another Internet giant, Google ($186 billion).

Facebook chief executive Mark Zuckerberg has deflected IPO talk for years, saying he is focused on building the company and not on going public.

But Zuckerberg, who co-founded Facebook in his Harvard University dorm room nine years ago and has seen it grow to more than 800 million members, recently seemed to bow to the inevitability of selling stock to the public.

In an interview with Charlie Rose of PBS television, Zuckerberg said an IPO was "not something I spend a lot of time on a day-to-day basis thinking about."

But, he added, "a big part of being a technology company is getting the best engineers and designers and talented people around the world.

"And one of the ways that you can do that is you compensate people with equity or options," Zuckerberg said. "At some point we're going to make that equity worth something publicly and liquidly."

Facebook's current annual revenue, mostly from online advertising, is estimated to be around $5 billion.

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TCS overtakes RIL as India's most valued firm (Market-cap Leader)

Mukesh Ambani-led Reliance Industries today lost its position of the country's most valued company to the IT giant TCS, part of the salt-to-software conglomerate Tata group.

As the share price of Reliance Industries Ltd (RIL) fell by 2.81% to a multi-year low of Rs 692.90 today, the company's market valuation slipped to Rs 2,26,886 crore -- a shade below Tata Consultancy Services' Rs 2,27,282 crore.

Consequently, RIL lost its long-held position (except for a brief period in August this year) of the country's largest company in terms of market valuation. In comparison to RIL's performance, TCS shares today ended with a modest loss of 0.35% at Rs 1161.25 and were earlier seen trading with a modest gain for most part of the trading session -- incidentally the last for 2011.

The performance of TCS stock was also a shade better than the barometer index Sensex, which fell by 0.57%. Earlier this month, RIL had also lost its position of the most influential stock in the Indian market to another IT giant Infosys.

RIL had been briefly dethroned from its position of the country's most valued company twice in August -- first to Coal India Ltd and then to another state-run firm ONGC. RIL's market value slipped below that of TCS for the first time at around 2 pm this afternoon and the country's biggest software exporter managed to retain the lead at the end of the trading session.

RIL has been among the best stocks to own in India for many years, but it continued to under-perform the overall market for most part of 2011, which has as such turned out to be a bad year for the stocks.

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MCX 5th largest commodity exchange in the world

Multi Commodity Exchange (MCX) has taken the fifth spot among the global commodity bourses in terms of the number of futures contracts traded. Based on the latest data from Futures Industry Association (FIA), during the period between January and June this year, about 127.8 million futures contracts were traded on MCX.

Shanghai Futures Exchange traded about 128.5 million contracts, while the world's top bourse, CME Group of Chicago, that included CBOT and NYMEX, traded nearly 353 million contracts.

Data shows MCX has replaced China-based Dalian Commodity Futures Exchange to gain the fifth position, a release from the bourse said. "The exchange moved up to the fifth position after being sixth largest commodity exchange for two consecutive years since 2009 when it replaced LME."

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Rupee slumps to record low of 53.35 per US dollar

The Indian rupee slumped to an all-time low of 53.35 to the dollar on Tuesday as shrinking domestic factory output and worries Europe's debt crisis could dampen global risk appetite triggered a scramble for dollars.

The beleaguered currency has been under pressure due to rising import bill and slowing export growth, which is expected to swell the current account deficit to $54 billion by the end of March.

At 10:45 a.m. (0515 GMT), the partially convertible rupee was at 53.31/32, taking losses to 17.8 per cent from its year-high in late July. It had closed down 1.5 per cent on Monday at 52.84/85.

The outlook for the rupee, Asia's worst performing currency this year, remains bearish.

"There is only one direction for the rupee now and it is not coming back soon because there is demand but no supply," said Ashtosh Raina, head of foreign exchange trading at HDFC Bank.

"This situation will persist until the global debt issues are resolved."

India is vulnerable to portfolio outflows from the stock market after data on Monday showed October industrial output slumped 5.1 per cent, the first drop in more than two years.

On Friday, India slashed its full-year growth forecast amid slowing domestic and global demand and officials warned the government was facing a serious balance of trade problem.

Traders said they were watching the Reserve Bank of India (RBI) for any intervention to halt the slide.

"If the RBI does not intervene the unit can slide to 55," Raina said.

Analysts have said India may face its worst financial crisis in decades if it fails to stem the rupee's slide, leaving the central bank with a difficult choice over how to make best use of its limited reserves to maintain the confidence of foreign investors.

The RBI sold $845 million in September for the first time in 10 months, and a further $943 million in October, according to the latest central bank data.

Mohan Shenoy, treasurer at Kotak Mahindra Bank, said the rupee would become fairly valued at 53.75/54.00, which was the real effective exchange rate.

"It could see some support at that level," he said. The one-month offshore non-deliverable forward contracts were quoted at 53.33, at par with the onshore spot rate. The one-month onshore forward dollar premium was at 32.50 points from 33.25 on Monday, the three-month was at 75.75 from 75, and the one-year premium was at 214.50 from 216.50.

In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all at 53.47. The total volume was at $1.2 billion.


Courtesy: EconomicTimes

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Facebook delays IPO until late 2012

Facebook is preparing to launch its blockbuster initial public offering in the US towards the end of next year, a later public debut by the social networking site than had been widely anticipated, say people familiar with the company.

The IPO, expected to be one of the world’s biggest with recent private share sales valuing Facebook at more than $66.5bn, has been expected by April 2012, with persistent speculation that it could even come this year.

However, people close to the company have told the Financial Times that Mark Zuckerberg, Facebook’s chief executive, wants to wait until next September or later in order to keep employees focused on product developments rather than a pay-out.

Courtesy : Financial Times

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Sensex plunges 704 pts, investors lose Rs 2 lakh crore

Investors’ stock market wealth plunged by a little over Rs 200,000 crore on Thursday after the Sensex recorded its sharpest single-day fall on fear of global economic slowdown. The total investor wealth, measured in terms of cumulative market value of all listed companies, plummeted by Rs 216,274 crore and stood at Rs 60,26,012 crore at the end of the day’s trade.

Of this, more than half or Rs 1,21,416 crore got eroded just from the 30-share BSE Sensex companies that include blue chips like Reliance Industries, Tata Motors, TCS and Bharti Airtel. Forty-six stocks saw market capitalisation erosion by more than Rs 1,000 crore each. Reliance Industries was the biggest loser, recorded m-cap erosion of Rs 16,192 crore in single day. The stock fell 6.2 per cent to Rs 786.45 on the BSE. TCS, Bharti Airtel, NTPC, Coal India and ITC reported m-cap erosion between Rs 5,000-Rs 10,000 crore each.
The US Federal Reserve’s ‘Operation Twist’ did not have any pleasant surprise for the equity investors across the world, said Amit Chheda, equities head, Inventure Growth and Securities.
"In fact, it gave warning signals of significant downside risks to the US economy. Nonetheless, worries in the euro zone are larger at the moment," he noted.

Unless a comprehensive bail-out is acted upon, one could see high risks to European banks holding euro assets. "This can lead to a domino effect in other continents as well," he added.

A fear of weak corporate earnings for the quarter ended September and the Federal Reserve's assessment that the US economy faces significant downside risks saw carnage in the equity market. On Thursday, the BSE Sensex tumbled 704 points or four per cent, to settle at 16,361, its biggest single-day fall since July 6, 2009, when the index plunged 870 points.

Shares of metal companies were the worst hit. Many of them plunged more than five per cent each after LMEX, a gauge of six metals traded on the London Metal Exchange (LME), closed at a 10-month low yesterday, on weak economic data in China. China is the world's largest consumer of aluminum and copper.

On Thursday, around 100 stocks, including BHEL, IFCI, JB Chemicals and Pharmaceutical, Gujarat NRE Coke and Indian Overseas Bank dropped to their 52-week lows. As many as 204 stocks froze the lower limit of circuit filter on the BSE.

The Realty index was the largest loser among sectoral indices. It fell almost six per cent on worries that higher interest rates could dent demand for residential and commercial properties. Among sectors, capital goods and power indices touched one-year lows on Thursday.

Courtesy : www.business-standard.com

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