Tuesday, March 31, 2009
Markets snap rally, dip over 4%
Markets snap rally, dip over 4%
The Financial Express, March 31, 2009, Corporates & Markets, P I
fe Bureau, Mumbai
Domestic bourses started the day with huge losses, after witnessing an upward rally during the past few weeks. Indices closed deep in the red on Monday, thereby recording one of the steepest drops in a day during the past two months. Weak global cues, coupled with short covering and renewed fears about the fate of the US auto industry also impacted the markets.
The 30-share Sensex of the Bombay Stock Exchange (BSE) closed at 9,568.14 points, down by 480.35 points, or 4.78%. The broader S&P CNX Nifty of the National Stock Exchange (NSE) was down by 130.50 points, or 4.20%, and ended the day at 2,978.15 points.
The interest rate-sensitive sectors like Realty and Banking took a huge beating on the domestic bourses, as investors booked profits. Dealers in the market said that fund managers also booked profits, as the quarter and fiscal year ends on Tuesday.
Ajay Parmar, research head at Emkay share and stock brokers, said, “We have to wait for a few more days to see how the markets shape up.”
Earlier in the day, Indian equity indices started below the dotted line and continued to trade in a range-bound manner. “Indian markets had reacted sharply to global markets in during the past couple of trading sessions; today was no different. In addition, there was some short covering in the markets during the past few trading sessions, but today, we lacked triggers and the markets ended with losses,” said Anil Advani, head of research, SBI Cap Securities.
Consumer Durables (CD) and Health Care (HC) were the only sectors on the BSE Sectoral indices that closed with some gains on Monday. Realty and Bankex were the worst performers of the day.
Dealers in the market said that investors are treading with caution, as the country’s economy is slowing and there is uncertainty on the political front ahead of the imminent general elections. Further fiscal and monetary policy measures might be needed to boost the economy; it is feared that the economy may fare worse than last year, said dealers.
Foreign institutional investors (FIIs), who, till last week were on the buying side, suddenly were net sellers at Rs 270.70 crore.
“There are chances that till the elections, there will not be much action on the FII front. However, it is quite difficult to predict the market movements and we might witness more volatility in the coming days,” said an analyst from a leading broking house.
The market breadth remained weak on Monday, as out of 2,473 stocks traded on the BSE, only 904 advanced; 1,471 stocks declined while 98 remained unchanged.
Among the Sensex pack, 28 stocks ended in red and the remaining two closed in green.
Dealers in the market said that in the ensuing days too, domestic markets will take the cue from their Western counterparts. They noted that till the quarterly earnings season starts mid-April, domestic markets are likely to remain under pressure.
India will grow 8%-plus as soon as global economy is back on track: Rakesh Mohan
India will grow 8%-plus as soon as global economy is back on track: Rakesh Mohan
The Financial Express, March 31, 2009, Page 4
Voicing his view on the growth of the economy, Reserve Bank of India deputy governor Rakesh Mohan said that while there will be some moderation in growth in the immediate future due to uncertain global market conditions, it is felt that India will return to its trend of 8% plus growth rate as and when global economy returns to normalcy. “This will however depend upon certain critical areas such as agriculture, infrastructure and fiscal consolidation being addressed,” he said.
Addressing the media in Mumbai on Monday while unveiling the report India’s financial sector assessment prepared by the central bank’s committee on financial sector assessment, he said, “Despite the widening trade deficit, the current account deficit has remained modest, largely due to high levels of private transfers and service sector exports. The low debt-to-equity ratio in the Indian corporate sector points to higher internal accrual and buoyancy in their revenues and profitability. Recent times have, however, seen a sharp correction in the valuations of listed firms as also in their profitability, as has happened globally. To that extent, there could be some reversal in the declining debt-to-equity ratio in the Indian corporate sector in the current context.
The global financial turmoil has led to a significant slowdown in net capital inflows in 2008-09 with net portfolio outflows, it is expected that overall India will still record net capital inflows, though modest, this year. Also, the Reserve Bank’s armoury of policy instruments for maintaining liquidity has, however, been effective in managing the current situation. Overall, during 2008-09, the rupee was volatile and the volatility was greatly accentuated from mid-September 2008 onwards. The Reserve Bank and the government have been active in taking a range of measures to meet shortfalls in rupee as also foreign exchange liquidity. It may be noted that among the countries surveyed by the Bank for International Settlements, the Indian foreign exchange market volumes have shown the fastest growth during 2004 to 2007. The foreign exchange market in India has continued to function well even during this time of turmoil.”
However, he added, “Given India’s high exposure to oil imports, coupled with the widespread impact in times of higher oil prices on the economy, a more efficient use of oil products is warranted. Another major concern, both domestically and globally, has been the rise in food prices. However, the recent correction in global prices, along with the series of measures already taken by the government on the supply side, has begun yielding results. There is a need to improve both the forward and backward linkages in agriculture through better credit delivery, investment in irrigation and rural infrastructure, improved cropping patterns and farming techniques, and development of the food processing industry and cold storage chains across the entire distribution system.”
“Going forward, it is essential to continue with focused attention on achieving a balance between financial development and financial stability. Also, for the growth momentum to be sustained, it is necessary to return to the path of fiscal prudence at both the central and state government levels. The key to maintaining high growth with reasonable price stability lies in rapid capacity additions through investments, productivity improvements, removal of infrastructure bottlenecks and amelioration of skill shortages,” he said.
Mixed growth signals
Mixed growth signals
The Hindu Business Line, March 31, 2009, Page 8
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Public spending should be directed at sectors that are finding growth hard to come by.
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February industrial output numbers have brought both good and bad news; the good news is that some core sector drivers are witnessing a revival of sorts. Steel output for instance rose 3.6 per cent following January’s 1.2 per cent growth and after persistently falling the preceding three months. The buoyancy in cement is even more promising since the expansion of 8.82 per cent in February follows the 6-11 per cent growth in output between October 2008 and January 2009. The bad news is that the rest of the core sector does not add up to scratch, with crude oil output declining 6.2 per cent and flat growth in petroleum refinery products; coal output did expand but at half the rate of last February. Usually month-wise data may be treated with caution for their randomness but in this case, given the trends in manufacturing over the last four months, short term fluctuations are vital clues on what needs to be done.
The data reflect well on the private sector, the largest players in cement and steel, and poorly on the public sector. In the latter, the worst performer is electricity with almost no sign of growth despite the heavy emphasis of planners on, and commitments of investments for, augmenting power production. Admittedly the growth of the cement and steel sectors has been predicated on the expansion in demand in semi-urban and rural areas, much of which has been generated by public investments in infrastructure. To that extent, policymakers need to push home the advantages that accrue from effective public spending and the consequent increases in purchasing power. The stimulus that will figure in the full budget later this year must be directed at those sectors that now find growth hard to come by; benefits will surely flow, for instance, from a plan to increase public housing. The most effective way of reaping benefits of Government spending, though, is to make sure that planned projects take off and that they are completed on time. Officials have from time to time aired their views on how much to spend to stimulate demand rather than how well the money can be spent.
Stimulus programs do not come free; the price the economy pays for heavy Government borrowing — Rs 2,41,000 crore over the next six months — keep bond rates high which in turn prevent lending rates from falling, as the RBI has frequently noted. “Crowding out” private investments this way may be necessary to flag off demand but for how long?
The Hindu Business Line, March 31, 2009, Page 8
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Public spending should be directed at sectors that are finding growth hard to come by.
--------------------------------------------------------------------------------
February industrial output numbers have brought both good and bad news; the good news is that some core sector drivers are witnessing a revival of sorts. Steel output for instance rose 3.6 per cent following January’s 1.2 per cent growth and after persistently falling the preceding three months. The buoyancy in cement is even more promising since the expansion of 8.82 per cent in February follows the 6-11 per cent growth in output between October 2008 and January 2009. The bad news is that the rest of the core sector does not add up to scratch, with crude oil output declining 6.2 per cent and flat growth in petroleum refinery products; coal output did expand but at half the rate of last February. Usually month-wise data may be treated with caution for their randomness but in this case, given the trends in manufacturing over the last four months, short term fluctuations are vital clues on what needs to be done.
The data reflect well on the private sector, the largest players in cement and steel, and poorly on the public sector. In the latter, the worst performer is electricity with almost no sign of growth despite the heavy emphasis of planners on, and commitments of investments for, augmenting power production. Admittedly the growth of the cement and steel sectors has been predicated on the expansion in demand in semi-urban and rural areas, much of which has been generated by public investments in infrastructure. To that extent, policymakers need to push home the advantages that accrue from effective public spending and the consequent increases in purchasing power. The stimulus that will figure in the full budget later this year must be directed at those sectors that now find growth hard to come by; benefits will surely flow, for instance, from a plan to increase public housing. The most effective way of reaping benefits of Government spending, though, is to make sure that planned projects take off and that they are completed on time. Officials have from time to time aired their views on how much to spend to stimulate demand rather than how well the money can be spent.
Stimulus programs do not come free; the price the economy pays for heavy Government borrowing — Rs 2,41,000 crore over the next six months — keep bond rates high which in turn prevent lending rates from falling, as the RBI has frequently noted. “Crowding out” private investments this way may be necessary to flag off demand but for how long?
DLF to divest its wind power biz
DLF to divest its wind power biz
Business Standard, March 31, 2009, Page 6
Arun Kumar / New Delhi
Had invested around Rs 1,500 crore in the business; may exit at Rs 1,100 crore.
India’s largest real estate developer, DLF Ltd, has decided to divest its windmill power generation business, which it says is non-core. Sources in the company said the management had decided to put the business on the block to raise resources for a more related business. The company has an installed capacity of around 260 Mw.
Sources said after concluding the acquisition of DLF Asset Ltd, a group company owned by DLF promoters’, KP Singh and family, they would start working on divesting the power generation business.
Rajeev Talwar, group executive director, DLF Ltd, refused comment.
The company had invested around Rs 1,500 crore in the business. After taking a depreciation claim of a significant amount, the company is looking at exiting at around Rs 1,100 crore, according to sources close to the development. The company had serious discussions with some private equity players, but there was no deal due to differences over valuation, they added.
The cost of setting up a windmill power plant is Rs 5-6 crore per Mw as against Rs 4-4.5 crore in case of a thermal power plant. Since the company is allowed to take a huge depreciation claim, the profit-making company will save a significant amount on tax obligation.
Another senior official said the company was in the midst of restructuring its businesses, which included buying DLF Asset Ltd. The company would continue to take steps to ensure better returns for shareholders, he added.
Power generation was not a core-business, the official said, adding that in the current environment, it was difficult to invest more in it. Without disclosing the size of the proposed transaction, the official said, “It depends on the offer price for such assets.”
DLF is in an advanced stage of concluding the acquisition of DLF Asset Ltd. According to indications, the company was hopeful of an announcement in the first week of April, the source said. A detailed due diligence by bankers and others is under progress. “Since the valuation of DLF Asset Ltd has come down marginally, investment bankers and legal experts are engaged in structuring the transaction so that the investors in DLF do not lose,” said a source.
DLF may offer more to Gurgaon project buyers
DLF may offer more to Gurgaon project buyers
Business Standard, March 31, 2009, Page 6
Joe C Mathew / New Delhi
DLF, the country’s biggest property developer, may announce a “relief package” for customers of its second Gurgaon project, ‘Express Greens’, a few days after it announced a similar package for those who had booked at its ‘New Town Heights’ residential project, also in Gurgaon.
The KP Singh-owned developer might announce a price reduction as well as construction-linked payment for Express Greens, sources said. The company had told its customers not to pay any instalment after the initial 35 per cent advance payment till construction commenced, some customers told Business Standard. A DLF spokesperson declined comment.
In the original agreement, DLF could take time-bound payments from customers without progress on construction. The company recently introduced a “construction-linked payment plan” for its New Town Heights customers.
Express Greens, launched in August 2008, is one of the biggest mid-income housing projects announced by DLF around Delhi. The company is in the process of getting plan layout approvals and environmental clearances for the project.
In a communication to customers, DLF reiterated its commitment to complete the project within three years and said the company had decided not to ask for installments till the start of construction. Express Greens is supposed to have three-bedroom apartments of 1,760 sq ft and four-bedroom houses of 2,125 sq ft, costing Rs 46 lakh to Rs 69 lakh.
The company also hinted that it was working on a relief package and the details would be finalised soon. Customers, however, want DLF to be clearer on when the work will start.
“DLF has not indicated what are the approvals they require and when they applied for these. We can only hope there is no delay,” said a person who had booked a flat in the project, declining to be named.
Last week, DLF offered as much as 20 per cent discounts to customers of the New Town Heights project. It announced 5 per cent discount on the basic sale price and a 10 per cent timely-payment rebate. The changes also included an increase in the compensation rates for delays from Rs 5 a sq ft per month to Rs 10 per sq ft.
Business Standard, March 31, 2009, Page 6
Joe C Mathew / New Delhi
DLF, the country’s biggest property developer, may announce a “relief package” for customers of its second Gurgaon project, ‘Express Greens’, a few days after it announced a similar package for those who had booked at its ‘New Town Heights’ residential project, also in Gurgaon.
The KP Singh-owned developer might announce a price reduction as well as construction-linked payment for Express Greens, sources said. The company had told its customers not to pay any instalment after the initial 35 per cent advance payment till construction commenced, some customers told Business Standard. A DLF spokesperson declined comment.
In the original agreement, DLF could take time-bound payments from customers without progress on construction. The company recently introduced a “construction-linked payment plan” for its New Town Heights customers.
Express Greens, launched in August 2008, is one of the biggest mid-income housing projects announced by DLF around Delhi. The company is in the process of getting plan layout approvals and environmental clearances for the project.
In a communication to customers, DLF reiterated its commitment to complete the project within three years and said the company had decided not to ask for installments till the start of construction. Express Greens is supposed to have three-bedroom apartments of 1,760 sq ft and four-bedroom houses of 2,125 sq ft, costing Rs 46 lakh to Rs 69 lakh.
The company also hinted that it was working on a relief package and the details would be finalised soon. Customers, however, want DLF to be clearer on when the work will start.
“DLF has not indicated what are the approvals they require and when they applied for these. We can only hope there is no delay,” said a person who had booked a flat in the project, declining to be named.
Last week, DLF offered as much as 20 per cent discounts to customers of the New Town Heights project. It announced 5 per cent discount on the basic sale price and a 10 per cent timely-payment rebate. The changes also included an increase in the compensation rates for delays from Rs 5 a sq ft per month to Rs 10 per sq ft.
Omaxe’s promoter pledges stake
Omaxe’s promoter pledges stake
Business Standard, march 31, 2009, Page 4
Real estate developer Omaxe Ltd. said one of its promoters had pledged a 13.76 per cent stake of the firm.
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