Wednesday, March 4, 2009
Sensex down 180 points
Sensex down 180 points
Business Standard, March 4, 2009, Page 1
A sudden all-round sell-off at the fag end saw the benchmark Sensex register its lowest closing low of 8,427.29 in more than three years, down 180 points despite firm opening trades in Europe. Section II, Page 1
Business Standard, March 4, 2009, Page 1
A sudden all-round sell-off at the fag end saw the benchmark Sensex register its lowest closing low of 8,427.29 in more than three years, down 180 points despite firm opening trades in Europe. Section II, Page 1
Rupee breaches 52-mark against $
Rupee breaches 52-mark against $
Business Standard, March 4, 2009, Page 1
The rupee went past the 52 mark against the dollar for the first time, on continued pressure from overseas investors who are offloading Indian securities. After touching a new low of 52.18 in intra-day trade, the Indian currency recovered to close at 51.97 against the dollar, three paise lower than yesterday’s close. Section II, Page 3
Business Standard, March 4, 2009, Page 1
The rupee went past the 52 mark against the dollar for the first time, on continued pressure from overseas investors who are offloading Indian securities. After touching a new low of 52.18 in intra-day trade, the Indian currency recovered to close at 51.97 against the dollar, three paise lower than yesterday’s close. Section II, Page 3
Fiscal numbers, election blues make FIIs see red
Fiscal numbers, election blues make FIIs see red
Business Standard, March 4, 2009, Page1, Section II (M&M).
RAJESH BHAYANI, Mumbai
Foreign institutional investors (FIIs) operating in the Asia-Pacific region continue to be underweight on the Indian market, according to a latest survey.
The survey, which covered 30 long-term funds, including hedge funds, found that less than 5 per cent of FIIs were overweight on India. However, all the 30 funds were overweight on China as it is perceived to be fiscally stronger. Also, there are worries about the upcoming general elections in India.
In the last two months, the BSE Sensitive Index, or Sensex’s, price earnings (P/E) ratio has fallen from 9.85 to 8.65. The Chinese Shanghai Composite’s P/E has risen from 14.12 to 16.37.
Also, most macro-economic numbers for India have shrunk back to the level when in 2003, when the ‘bull run’ had just started gathering steam. In the September-December quarter, the gross domestic product (GDP) growth of the country is at a sixyear low of 5.3 per cent. Corporate earnings have receded to five-year lows, while the rupee-dollar exchange rate is at an all-time low to the dollar.
But the main problem is the nation’s fiscal deficit. The projected fiscal deficit for financial year 2008-09 is 6 per cent – a six-year high. This led Standard and Poor to downgrade India’s sovereign rating to negative.
The GDP to market-capitalisation ratio has also fallen from 1.36 in early 2008 to just half of that, reflecting the mayhem in the equities market.
“Even the geopolitical scenario, which was improving six years ago and, as a result, had laid the foundation for the ‘bull run’, is worsening again in the Indian sub-continent,” said a senior executive with a leading FII. Relations between India and Pakistan have worsened since the 26/11 Mumbai attacks.
According to the survey done by India Infoline, FII fund managers continue to be underweight on beaten-down sectors like technology, real estate and cyclical stocks like metals.
The survey found that 67 per cent of funds were underweight or had taken short positions on technology, whereas 40 per cent of funds were underweight on real estate and cyclical commodities. The main concern about technology was reduction in client budgets in FY10 and expectations of an appreciation in the rupee’s value. Given this backdrop, FIIs were cautious about India’s prospects.
The good news is that many FIIs believe in the long-term story. Manishi Raychaudhuri, head of research at BNP Paribas Securities India, said in the firm’s latest India strategy report that the near-term was clouded by potential job losses, decline in infrastructure spending and corporate capex, rising fiscal deficit and uncertainty over the general elections.
“However, we believe India will be a key beneficiary of the structural drivers of demographic dividend, rising affluence and rising urbanisation,” the report pointed out.
India Infoline’s survey, however, found that more than 80 per cent believed that crude oil would behave differently from other commodities and rise from here on. Almost half of the fund managers (50 per cent) expected crude oil at $40$50 per barrel in the next six months, while another 30 per cent expected it to go above $50.
In the wake of these findings, the main question for investors is the position they could take in the present market conditions.
Bharat Agrawal of India Infoline’s institutional sales team said: “We believe that this could be the time to take a contrarian call as, historically, contrarian bets have made money. That implies that, if we were contrarian, we would aggressively buy India with a double overweight position on information technology.”
Business Standard, March 4, 2009, Page1, Section II (M&M).
RAJESH BHAYANI, Mumbai
Foreign institutional investors (FIIs) operating in the Asia-Pacific region continue to be underweight on the Indian market, according to a latest survey.
The survey, which covered 30 long-term funds, including hedge funds, found that less than 5 per cent of FIIs were overweight on India. However, all the 30 funds were overweight on China as it is perceived to be fiscally stronger. Also, there are worries about the upcoming general elections in India.
In the last two months, the BSE Sensitive Index, or Sensex’s, price earnings (P/E) ratio has fallen from 9.85 to 8.65. The Chinese Shanghai Composite’s P/E has risen from 14.12 to 16.37.
Also, most macro-economic numbers for India have shrunk back to the level when in 2003, when the ‘bull run’ had just started gathering steam. In the September-December quarter, the gross domestic product (GDP) growth of the country is at a sixyear low of 5.3 per cent. Corporate earnings have receded to five-year lows, while the rupee-dollar exchange rate is at an all-time low to the dollar.
But the main problem is the nation’s fiscal deficit. The projected fiscal deficit for financial year 2008-09 is 6 per cent – a six-year high. This led Standard and Poor to downgrade India’s sovereign rating to negative.
The GDP to market-capitalisation ratio has also fallen from 1.36 in early 2008 to just half of that, reflecting the mayhem in the equities market.
“Even the geopolitical scenario, which was improving six years ago and, as a result, had laid the foundation for the ‘bull run’, is worsening again in the Indian sub-continent,” said a senior executive with a leading FII. Relations between India and Pakistan have worsened since the 26/11 Mumbai attacks.
According to the survey done by India Infoline, FII fund managers continue to be underweight on beaten-down sectors like technology, real estate and cyclical stocks like metals.
The survey found that 67 per cent of funds were underweight or had taken short positions on technology, whereas 40 per cent of funds were underweight on real estate and cyclical commodities. The main concern about technology was reduction in client budgets in FY10 and expectations of an appreciation in the rupee’s value. Given this backdrop, FIIs were cautious about India’s prospects.
The good news is that many FIIs believe in the long-term story. Manishi Raychaudhuri, head of research at BNP Paribas Securities India, said in the firm’s latest India strategy report that the near-term was clouded by potential job losses, decline in infrastructure spending and corporate capex, rising fiscal deficit and uncertainty over the general elections.
“However, we believe India will be a key beneficiary of the structural drivers of demographic dividend, rising affluence and rising urbanisation,” the report pointed out.
India Infoline’s survey, however, found that more than 80 per cent believed that crude oil would behave differently from other commodities and rise from here on. Almost half of the fund managers (50 per cent) expected crude oil at $40$50 per barrel in the next six months, while another 30 per cent expected it to go above $50.
In the wake of these findings, the main question for investors is the position they could take in the present market conditions.
Bharat Agrawal of India Infoline’s institutional sales team said: “We believe that this could be the time to take a contrarian call as, historically, contrarian bets have made money. That implies that, if we were contrarian, we would aggressively buy India with a double overweight position on information technology.”
Sobha looking to sell stake
Sobha looking to sell stake
The Economic Times, March 4, 2009, Page 7
J Padmapriya, BANGALORE
PROMOTERS of Sobha Developers, a Bangalore-based realty major, are hoping to raise Rs 600 crore this year through sale of up to 26% stake or by unlocking value from the company’s land bank.
The Economic Times, March 4, 2009, Page 7
J Padmapriya, BANGALORE
PROMOTERS of Sobha Developers, a Bangalore-based realty major, are hoping to raise Rs 600 crore this year through sale of up to 26% stake or by unlocking value from the company’s land bank.
The company has already identified land parcels, amounting to 400 acres, across Bangalore, Chennai, Kerala, Hyderabad and Pune for divestment. Some of these land parcels in Bangalore are in Minerva Mill, Bangalore East and Thanisandra. Sobha’s total land bank assets are in the region of 3,000 acres.
“We are open to all options including raising equity at the entity level,” Sobha managing director JC Sharma told ET. Sobha has been talking to a host of big private equity funds for stake dilution.
The company may be looking at deploying these funds in its ongoing projects. Sobha, a residential segment leader in Bangalore, has nearly 1,400 apartment units under development which are scheduled to be ready in two to three years.
Also, in a deviation from its model of selling constructed apartments and villas, Sobha has entered the business of selling plots of land. It is looking at selling 15 acres as large-sized plotted development in Bangalore’s Thanisandra area. These plots carry an approximate tag of Rs 3,000 per sq ft.
Realty trackers say, companies may look at monetising their land banks by selling them off as plots. “It is difficult to offload a large parcel of land in the current scenario. So, carving such a parcel into several plots is more doable. Besides, companies do not have to incur construction costs and a long gestation period,” a consultant says. A year ago, valuations of realty companies soared based on their land bank assets. Today, with falling realty prices and negative buying sentiments, many realtors are looking at unconventional options to meet liquidity requirements.
DLF ups agent fee to 3% in Chennai
DLF ups agent fee to 3% in Chennai
The Economic Times, March 4, 2009, Page 4
Hemamalini Venkatraman CHENNAI
DLF is incorporating a new element in its overall selling strategy due the difficult market conditions. After trying to woo consumers through price-cuts, it has now announced an incentive package for realtors marketing its Garden City project in Chennai. The Gurgaon-based realtor plans to revise the incentive package for agents upward to 3% against the industry norm of 2%.
“With developers finding it difficult to sell in these turbulent times, the scheme of 3% commission for new bookings has reassured us,” an agent told ET on condition of anonymity. Hanu Reddy, ICICI Property Search, Home Bay and Century Realtors are some of the key organised brokers/agents who have been empanelled to market the 3,493-apartment project.
DLF Southern Homes head KK Raman said it is a “limited period offer”, which is valid up to May 31. “The market needs stimulus to bounce back and this is just one element in our overall strategy,” he told ET. While 35% of the sales so far booked has been through direct selling agents (DSA), the percentage is much lower when compared Delhi, Mr Raman said. He added 14 fresh bookings had been made in the past 14 days but was unable to quantify the DSA contribution. DLF is known to have a generous track record as far as commissions are concerned, but unlike other geographies where its relationship with local brokers help it to make sales, it was faced with a different experience in Chennai.
The Economic Times, March 4, 2009, Page 4
Hemamalini Venkatraman CHENNAI
DLF is incorporating a new element in its overall selling strategy due the difficult market conditions. After trying to woo consumers through price-cuts, it has now announced an incentive package for realtors marketing its Garden City project in Chennai. The Gurgaon-based realtor plans to revise the incentive package for agents upward to 3% against the industry norm of 2%.
“With developers finding it difficult to sell in these turbulent times, the scheme of 3% commission for new bookings has reassured us,” an agent told ET on condition of anonymity. Hanu Reddy, ICICI Property Search, Home Bay and Century Realtors are some of the key organised brokers/agents who have been empanelled to market the 3,493-apartment project.
DLF Southern Homes head KK Raman said it is a “limited period offer”, which is valid up to May 31. “The market needs stimulus to bounce back and this is just one element in our overall strategy,” he told ET. While 35% of the sales so far booked has been through direct selling agents (DSA), the percentage is much lower when compared Delhi, Mr Raman said. He added 14 fresh bookings had been made in the past 14 days but was unable to quantify the DSA contribution. DLF is known to have a generous track record as far as commissions are concerned, but unlike other geographies where its relationship with local brokers help it to make sales, it was faced with a different experience in Chennai.
Unitech back in market after five months
Unitech back in market after five months
Business Standard, March 4, 2009, Page 6
BS REPORTER
Unitech, India’s secondlargest real estate developer, has launched two projects after a gap of nearly five months, indicating improved consumer confidence and finalisation of a strategy in response to a slump in demand.
The Sanjay Chandra-owned company launched a 1 million square feet mid-income housing project in Gurgaon’s Sector-47 on February 28 and a commercial project in Mumbai with its joint venture partner.
The launches follow the sale of the company’s Gurgaon hotel property for Rs 230 crore, restructuring of short-term debt and final-stage negotiations for sale of 225,000 square feet office property in South Delhi.
The prices offered, Rs 2942 lakh per flat, are almost half the secondary market prices of such properties in the vicinity, according to Unitech’s head of strategy and planning, R Nagraju.
Cement makers hike prices by Rs 5-8/bag
Cement makers hike prices by Rs 5-8/bag
The Economic Times, March 4, 2009, Page 9
Mithun Roy MUMBAI
BUOYED by an improved demand, cement makers have raised prices by Rs 5-8 per 50 kg bag in Mumbai and Gujarat from Sunday, defeating the government move to pull down cement prices by cutting down excise duty.
After the hike, retail cement prices are hovering around Rs 240 per bag in Mumbai and Gujarat, said cement dealers. However, there is no change in prices in other parts of Mahararashtra, they said.
Sanjay Ladiwala, president of Bombay Cement Dealers and Stockists Association, attributed the price hike to surge in demand and shortage of wagons. Ambuja Cements’ marketing head Ajay Kapur said the marginal increase in prices took place due to sudden escalation of demand from the government and infrastructure projects. “Developers are in a hurry to finish their projects as the financial year is drawing to an end,” he added. The real estate sector accounted for almost 55% of demand for cement in India.
HM Bangur, president of Cement Manufacturers’ Association and managing director of Shree Cement, said: “We have passed on the excise duty relief to consumers and prices are stable in the north and fell in the east parts of the country.” He declined to comment on the price hike in Mumbai and Gujarat.
Dealers said cement prices remain stable—Rs 215 to Rs 230 per 50-kg bag—in the southern and northern markets while prices have come down in the eastern markets after the recent 2% cut in excise duty on bulk cement.
Industry experts don’t expect cement prices to soften in the short run as the demand has been growing at over 5%. Over the longer term, however, they expect prices to fall, as new capacities come up for production. The outlook for the January-March quarter looks better than what it was a year ago, as cement dispatches have started going up, said an analyst with a domestic brokerage firm.
ACC’s dispatches in February were up 4% year-on-year at 1.75 million tonnes against 1.69 million tonnes in the same period last year. Production rose 3% to 1.74 million tonnes compared to 1.69 million tonnes last year.
The Economic Times, March 4, 2009, Page 9
Mithun Roy MUMBAI
BUOYED by an improved demand, cement makers have raised prices by Rs 5-8 per 50 kg bag in Mumbai and Gujarat from Sunday, defeating the government move to pull down cement prices by cutting down excise duty.
After the hike, retail cement prices are hovering around Rs 240 per bag in Mumbai and Gujarat, said cement dealers. However, there is no change in prices in other parts of Mahararashtra, they said.
Sanjay Ladiwala, president of Bombay Cement Dealers and Stockists Association, attributed the price hike to surge in demand and shortage of wagons. Ambuja Cements’ marketing head Ajay Kapur said the marginal increase in prices took place due to sudden escalation of demand from the government and infrastructure projects. “Developers are in a hurry to finish their projects as the financial year is drawing to an end,” he added. The real estate sector accounted for almost 55% of demand for cement in India.
HM Bangur, president of Cement Manufacturers’ Association and managing director of Shree Cement, said: “We have passed on the excise duty relief to consumers and prices are stable in the north and fell in the east parts of the country.” He declined to comment on the price hike in Mumbai and Gujarat.
Dealers said cement prices remain stable—Rs 215 to Rs 230 per 50-kg bag—in the southern and northern markets while prices have come down in the eastern markets after the recent 2% cut in excise duty on bulk cement.
Industry experts don’t expect cement prices to soften in the short run as the demand has been growing at over 5%. Over the longer term, however, they expect prices to fall, as new capacities come up for production. The outlook for the January-March quarter looks better than what it was a year ago, as cement dispatches have started going up, said an analyst with a domestic brokerage firm.
ACC’s dispatches in February were up 4% year-on-year at 1.75 million tonnes against 1.69 million tonnes in the same period last year. Production rose 3% to 1.74 million tonnes compared to 1.69 million tonnes last year.
FE Editorial : Straws or shoots?
FE Editorial : Straws or shoots?
The Financial Express, March 4, 2009, Page 6
Could the two stimulus packages announced by the government in December and January have already begun to help sectors like automobile, cement and steel? All three sectors are reporting an upturn in January and February. For auto, excise duty cuts, cheaper auto loans by banks, and the pay commission arrears to government employees may have pushed sales of cars and two wheelers in February, after eight months of doldrums. But it’s too early to take a call on sustainability. Much of the growth in sales in February this year is on account of low base in the same month last year, as consumers had postponed buying automobiles in anticipation of price cuts after the Budget. Even automakers are anticipating flat sales in months to come because of subdued corporate spending and the higher sales base of last year. Overall commercial vehicles sales in February 2009 saw a 52% decline as compared to the same month last year because banks were stringent on disbursing loans in this category. Cement dispatches rose by 8.3% at 16.1 million tonnes in January 2009 because of high demand from government infrastructure projects. However, there is no visible recovery in cement demand from the real estate sector and the demand has in fact slowed down in recent months due to slackening property sales. But with the government announcing a slew of measures to revive the demand in the housing sector especially of low-cost housing, demand for cement is likely to pick up around June this year. A notable indicator of rising cement demand is on the prices, which started firming up and went up by Rs 3 per 50 kg bag in Mumbai last month. Prices are likely to start softening from the second half of the current fiscal as new capacities start coming on-stream. This points to the possibility of overcapacity in the industry.
Falling demand from the automobile and real estate sectors had a direct bearing on the steel sector. Though the demand for steel picked up by 1.5% in January compared to the same month last year, distress sales by companies has put further pressure on prices. During the month, average prices of hot rolled coils fell by 11.3% and galvanised sheets were down by 9%. And now with a sharp reduction in input prices expected in the renewed contracts of domestic companies, and global steel prices remaining subdued, it is likely that steel prices would remain weak this year. Whether the third stimulus package and a further monetary easing, assuming it comes, have any effect will be clear by the time the next government comes in.
Govt focuses on housing as growth booster
Govt focuses on housing as growth booster
Hindustan Times, March 4, 2009, Page 25
The government is looking at various ways to boost demand in the housing sector, especially in the wake of GDP growth rate dropping to 5.3 per cent for the third quarter of the current fiscal, with a serious look at boosting affordable homes that can generate demand.
It is also in talks with builders to devise ways to boost demand for housing.
Home loans have also slumped in the past few months, causing concern. Both as a social objective and as a means to sustain economic growth, housing is considered a crucial sector.
“We are exploring various ways to ensure that demand for housing picks up, one of which is pricing,” a government official who did not wish to be identified told Hindustan Times.
However, direct tax incentives to consumers at this juncture is ruled out. The proposal may be considered for the full budget, once the new government takes over after elections that end in May.
“The move would depend on the economic agenda of the party which forms the government though the issue is likely to be considered by any party which comes to power,” the official added. Growth in home loans has significantly decelerated in the current fiscal year, thanks to the uncertainty in the global and domestic markets. At the end of December 2008 in the current fiscal year, credit worth Rs 21,989 crore was directed towards the housing sector, lower than the Rs 31,780 crore
in the corresponding period of the previous financial year.
Meanwhile, public sector bank chiefs say they are willing to lend to consumers eyeing new properties. “However, there is very little demand and until property prices soften, it is unlikely to pick up,” said Allen CA Pereira, chairman and managing director, Bank of Maharashtra. Several banks have already reduced home loan rates and indications are that rates would further soften in the next couple of months.
“Once housing picks up, demand in other allied sectors such as steel and cement would also go up,” another bank chairman said.
Hindustan Times, March 4, 2009, Page 25
The government is looking at various ways to boost demand in the housing sector, especially in the wake of GDP growth rate dropping to 5.3 per cent for the third quarter of the current fiscal, with a serious look at boosting affordable homes that can generate demand.
It is also in talks with builders to devise ways to boost demand for housing.
Home loans have also slumped in the past few months, causing concern. Both as a social objective and as a means to sustain economic growth, housing is considered a crucial sector.
“We are exploring various ways to ensure that demand for housing picks up, one of which is pricing,” a government official who did not wish to be identified told Hindustan Times.
However, direct tax incentives to consumers at this juncture is ruled out. The proposal may be considered for the full budget, once the new government takes over after elections that end in May.
“The move would depend on the economic agenda of the party which forms the government though the issue is likely to be considered by any party which comes to power,” the official added. Growth in home loans has significantly decelerated in the current fiscal year, thanks to the uncertainty in the global and domestic markets. At the end of December 2008 in the current fiscal year, credit worth Rs 21,989 crore was directed towards the housing sector, lower than the Rs 31,780 crore
in the corresponding period of the previous financial year.
Meanwhile, public sector bank chiefs say they are willing to lend to consumers eyeing new properties. “However, there is very little demand and until property prices soften, it is unlikely to pick up,” said Allen CA Pereira, chairman and managing director, Bank of Maharashtra. Several banks have already reduced home loan rates and indications are that rates would further soften in the next couple of months.
“Once housing picks up, demand in other allied sectors such as steel and cement would also go up,” another bank chairman said.
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