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Sunday, February 15, 2009


South-based Consolidated Construction Consortium Ltd (CCCL) is a pure play construction contractor. The company is well-placed to capture opportunities in both sectors that it operates in — realty and infrastructure — and retains the flexibility to shift between them based on sector prospects. It has a sizeable short-term order backlog more than half of which comes from existing customers, suggesting execution skills that are not easily replicated by other players.

At Rs 126, the stock trades at five times its trailing 12 month earnings, at a premium to some peers. Enterprise value stands at 0.32 times its trailing 12 months sales and 0.26 times its projected FY10 revenues. Buying this stock will pay in the long term, given the company’s wide-ranging expertise, focus on construction contracting alone and reputation for delivering quality which will help it tide over a slowdown in the coming few quarters.
Healthy Order Book

The current value of outstanding orders stands at Rs 3,650 crore, up almost Rs 1,000 crore from the order book at the beginning of this financial year. Order backlog is 2.5 times the 2007-08 revenues. CCCL’s projects span a short duration averaging 12 to 18 months, thus ensuring quick transition of orders into revenue and medium-term earnings visibility. One longer term project is the Chennai airport project commanding a 30 month timeline.

Centred on pure construction contracts, CCCL does not have any projects on long-term Build-Operate-Transfer models. Price escalation clauses are built into over 80 per cent of contracts. In a bid to tide over the slowing pace of order inflow, CCCL has relaxed its benchmark for order value, and sought to broaden expertise in various sectors which would serve it in bidding for a greater diversity of projects.
Order book composition

The order book is dominated by commercial construction projects with 45 per cent of the orders stemming from this segment. Industrial contracts are about Rs 600 crore (16 per cent). Share of infrastructure contracts has been slowly increasing, currently at about Rs 1,440 crore or 38 per cent of the order backlog. Having been contracted for airport projects, bridges, it hopes to solidify presence in the infrastructure space by booking orders in water treatment plants, metro rail construction, power and similar projects. Residential construction forms a minimal portion of the order book, and will remain so for the coming quarters. Outstanding contracts are worth about Rs 30 crore, less than 1 per cent of the backlog. This may shield it considerably from the marked slowdown and liquidity problems that are currently holding up realty projects. A conscious effort is being made to include a greater proportion of public sector projects to reduce its dependence on the private sector on which front the company is facing payment delays.

Sales and profits grew at a CAGR of 85 and 114 per cent, respectively, over the past three years. Return on capital employed improved on a year-on-year basis, from 31 to 33 per cent in the space of three years. Return on investment moved up as well, from 23 to 27 per cent. Turnover of working capital into sales picked up from 2.6 times in FY06 to 3.7 times in FY 08. On the funding side, CCCL still retains a part (Rs 51 crore) of its IPO proceeds and it operates at a low leverage of 0.4 times, ranking lower than most peers. Interest cover is fairly strong at about 11 times, leaving the company reasonably comfortable to meet fund requirements.

The past two quarters have seen CCCL’s revenues continue to expand at a fast clip, even as margins fell. The September quarter saw a 22 per cent increase in sales compared to the same quarter in 2007, but operating and net profits dipped 5 and 37 per cent, respectively. The December quarter fared slightly better with sales up by 30 per cent over the same period in 2007, as operating and net profits declined by 6 and 32 per cent. Margins suffered with a 144 basis points cut in operating margins in the December quarter over the preceding quarter.

Five order cancellations worth Rs 395 crore and a slowdown in execution of select projects due to clients’ funding constraints meant that successive quarters saw sales sliding. Though manpower costs have increased on a quarterly basis, the company has held back hikes in salaries though it is not resorting to workforce cuts. The average period for debt collection too has increased from 51 days at the start of this financial year to the current 60 days. The next few quarters may see sluggish order inflows, slower execution of projects or maybe further cancellations, but the company remains one of the preffered exposures in the construction space.

Madras Cements: Hold

Relief on costs, volume additions from new capacities and the advantage of operating in a region with high demand potential where prices too are lending support suggest reasonable earnings growth for Madras Cements after a subdued December quarter. At the current market price of Rs.66, the stock trades at just four times trailing earnings, the stock is at a discount to most large cement players and offers promise of upside.
Demand looks strong

The demand for cement is growing at a strong pace in the Southern region with production and consumption numbers growing neck to neck. When production rose by 10 per cent year-on-year in the period April-January (2008-09) the region had consumed close to 12 per cent more than what it did during this period last year. A fairly tight supply situation is seen for at least a few quarters in this region.

Madras Cements’ current capacity is 8 million tonnes and it will increase to 10 million tonnes by this month-end through a new 2 million tonne per annum plant at Ariyalur, Tamil Nadu. The company, as of now, has no other capex plans.

The company’s competitor India Cements is upgrading its plant in Andhra Pradesh by increasing its capacity by another 1.2 million tonnes and this might be completed some time before the end of 2009. But for these, there are no large-scale new volume additions coming up in the Southern region.

Madras Cements has been seeing strong demand over the last few quarters with orders from infrastructure projects in Andhra Pradesh and Tamil Nadu. For the quarter ending December 2008, the company’s cement sales volumes rose by 7.3 per cent to 1.5 million tonnes from 1.4 million tonnes in the December quarter last year.

This growth in despatches is among the highest in the industry, next to ACC that recorded 8 per cent increase in despatches in the quarter.

While volume growth for Madras Cement has been strong, prices in this region too lent support to revenues. But for the Rs 5-6 cut in prices on the back of the excise duty reduction in December 2008, cement prices continue to hover at a high Rs 260 per bag in the Southern region.

Cost side relief

The company’s raw material costs can be expected to moderate considerably over the next few quarters, on global coal prices easing off. The company imports nearly 75 per cent of its coal requirements. International coal prices have eased off from $195 in July last year to $85-90 currently.

On the power front, the company has been relentlessly adding up its windmill capacity to reduce dependence on the State grid and coal/diesel fired DG sets, which are an expensive source of power.

Madras Cements windmill capacity rose by 23 megawatts over the past year through new additions and currently stands at 146 mega watts. Wind mills are the cheapest source of power with the per unit cost at Rs 1.75-2.00 (power from grid comes at Rs 4.45/unit and that from coal gen-sets at Rs 5-6/unit).

The company is also putting up two grinding units one each at Salem and Chengalpattu in Tamil Nadu to save logistics cost by reducing the distance moved by trucks. These are strategic locations, both with respect to fly-ash availability and target markets. Government’s recent cut in diesel prices will also help reduce the logistics expenses.

The December quarter results of Madras Cements had several dissapointing aspects, with net profit declining by 43 per cent even as sales growth stood at 19.5 per cent year on year.

Lower revenues reported by the windmill segment, higher depreciation and interest costs contributed to the performance. Compared to Rs 30 crore in the first quarter and Rs 40 crore in the second quarter, the company’s wind mill segment reported only Rs 6 crore revenues in the December quarter.

The fall in windmill performance has been common to all windmill units in this region, and is attributed to seasonal factors. As operations normalise over the next quarter, the contribution may see improvement in the coming quarters. The 61 per cent year-on-year increase in depreciation charges is attributable to the company’s commissioning new windmills by the end of second quarter, from which revenues didn’t flow in for the quarter.

Profits were also dented by a sharp rise in interest expenses. This is attributed to both higher interest cost and higher borrowings. The company borrowed Rs 300 crore last year towards its capex plans and working capital requirements. High interest costs were partially due to high cost short term borrowings from the money market; which has seen rates receding sharply.

The current and the coming quarters could see interest burden easing as the impact of lower market interest rates is felt on the numbers. Newly commissioned capacities and still healthy volume growth in cement, apart from the contribution from the windmills, may lead to better revenue growth.


Investors with high risk-appetite and a two-three year investment horizon can consider investing in Infrastructure Development Financing Company (IDFC). However, given the range-bound market conditions, we recommend buying the stock in a phased manner to take advantage of declines. Rs 48-50 levels are good entry points to the stock.

IDFC, a leading non-banking financial company (NBFC) in the infrastructure financing space, provides a wide array of financial services, which include core lending, private equity, project equity, investment banking and advisory, equity broking and asset management.

Superior return on assets (2.6 per cent for trailing one year ended December 2008), robust other income, lower operating costs, high capitalisation (capital-adequacy ratio of 22.1 per cent) and a good quality advances book are the key takeaways. IDFC may be among the beneficiaries from the stimulus package proposal to set up a special purpose vehicle for NBFC financing and to allow easier access to ECBs.

At current market price of 59, the stock is trading at 9-10 times its trailing one year consolidated earnings and 1.2 times its expected book value at the end of FY09. The stock is trading at a premium to most of the banks and other NBFCs, thanks to IDFC’s focussed role in the infrastructure sector, strong subsidiaries which may survive the downturn and creditworthy clients which may protect the loan book from major slippages.

In a falling interest rate scenario, the slightly longer duration of IDFC’s advances book, compared to its borrowings, may help give it a better spread. In addition, advances are locked in at higher rates, partially shielding the company’s spreads from declining rates.
Business prospects

While around $500 billion is expected to be the infrastructure spending for the Eleventh Plan, there is a huge funding gap which the Government intends to fill by allowing private investments. This is where IDFC comes in. The lender has an advantage by virtue of its high exposure to roads and power (62 per cent of total exposure) which may continue to attract higher levels of investment.

The advances book (Rs 21,022 crore outstanding at end-December 2008) of IDFC is mainly accounted for by energy (37 per cent), transport (25 per cent), telecom (11.8 per cent), industrial and commercial real-estate (14 per cent), tourism (5 per cent) and cement and steel (1.8 per cent).

The top sectors in the loan book appear relatively immune to the slowdown. Bonds and debentures form 50 per cent of the total borrowings followed by rupee loans (25 per cent), short-term loans (12 per cent) and forex loans (10 per cent). Given IDFC’s triple-A ratings it may be able to raise bonds at reasonably good rates in a falling interest rate regime. The forex exposure is completely hedged from currency fluctuation.

Based on consolidated numbers, the advances disbursed by IDFC grew at 45 per cent compounded annually for the last five years. But this slowed to 7 per cent for the nine months ended December 2008. Moderate growth in the loan book can be attributed to IDFC’s attempt to go slow on advances to avoid slippages; high interest rates prevailed during the quarter which forced some borrowers to wait on the sidelines for better rates.

Though the loan book grew at 7 per cent, net interest income from lending activity grew by 41 per cent for this period on the back of improved spreads due to re-pricing of some advances. Net interest income (NII) from treasury was flat and dragged the total NII growth to 32 per cent. IDFC’s net profits grew by 7 per cent for the nine months ended December 2008, muted due to a fall in the non-interest income and increase in operating expenses.

Non-interest income fell by 6 per cent due to fall in income from investment banking activity (IDFC SSKI) and the income from equity (Principal) investments, both of which are equity market linked. Operating expenses grew by 40 per cent due to integration of the Stanchart AMC, which was acquired in March, 2008; but the company has taken variable pay cuts in recent times to moderate these costs.

The interest spread of the company, which is at 2.3 per cent, has improved sequentially as well as year-on-year. Slower fund-based activity, that is, slowing disbursement may pressure lending rates in coming quarters, but may be partially offset by lower borrowing costs. Consolidated numbers show income from asset management increasing threefold year on year, helped partly by inorganic factors. The net NPA is zero and Gross NPA to advances is 0.2 per cent.

However, IDFC does perceive some stress to its real-estate exposure (Rs 3000 crore, around 14.2 per cent of loan book), which may require some restructuring.

Though asset quality is not a major concern for IDFC given the composition of its loan book, loan growth may be slower in the coming quarters given the company’s cautious stance on lending. Key subsidiaries of IDFC do depend on equity market conditions; and weak equity markets may continue to weigh on fee income until market conditions improve. In this context, the continuing expansion in assets under management in the projects, mutual fund and private equity businesses inspires confidence.

The possibility of raising further capital to protect its credit ratings have been a key concern weighing on the stock over the past year. Though the company is allowed to raise $750 million to maintain its CAR, the company is biding its time on account of market conditions and is now looking mainly at internal accruals.

A credit downgrade may carry the risk of pegging up the cost of funds. The management has already made it clear that it would not raise funds in the near future and that its loan growth target will be moderated to maintain asset quality, spreads and capital adequacy.

Investors in IDFC can also watch for a stake sale on the NSE, which may unlock considerable value. However, this is unlikely to materialise anytime soon given the market conditions. An equity market upturn would also significantly buoy the profitability and valuation for IDFC’s large subsidiaries.

Domestic News - Feb 15 2009

Govt allows urea units to convert to gas

The Cabinet Committee on Economic Affairs approved a policy to encourage urea units across the nation to convert of natural gas. The new policy provides for a Special Fixed Cost towards reimbursement of the cost of conversion to the urea unit after its conversion to gas is completed. The Cabinet also approved a special dispensation under the New Pricing Scheme, Stage-III, to enable restarting of urea production from the Trombay-V unit of Rashtriya Chemicals Ltd. (RCF), which has remained closed for last more than four years. The Cabinet also approved restarting of existing Naphtha based units which are under shutdown, provided they convert to gas before March 2010, as is necessary for other operational Naphtha based units.

Newsprints get exemption in customs duty

The Government announced special custom duty exemptions to the newspaper and magazine publishing industry in the country. These concessions have been announced in view of the current economic slowdown, particularly affecting the newspaper industry. The customs duty has been fully exempted on ‘newsprint’, as well as on ‘uncoated paper used for printing of newspapers’- commonly known as ‘glazed newsprint’. The customs duty has been fully exempted on ‘light weight coated paper used for printing magazines’.

The newspaper and magazine publishing sector had sought relief from the Government in the wake of sharp rise in international prices of newsprint and light weight coated paper, which has resulted in a significant increase in publishing costs. Falling advertising revenues due to the recent economic slowdown have also afflicted this sector.

India signs uranium supply pact with Russia

India and Russia signed a deal, whereby OAO Tvel will supply uranium to Nuclear Power Corp., India’s monopoly atomic energy generator, for its nuclear power plants.

"The total cost of contracts is more than US$700mn," Russia's state-owned nuclear power company Atomenergoprom said. TVEL is a unit of Atomenergoprom. Nuclear Power Corp. will buy 2,000 tons of uranium from TVEL, according to the Sudhinder Thakur, executive director at India's largest nuclear power company. The uranium supplies are expected to start in three to four months, Thakur said. TVEL will also sell India 60 tons of light enriched uranium to fire two power generation units at Tarapur, he said.

January car sales down 3.2% yoy

Domestic sales of passenger cars fell 3.2% last month, as tight credit conditions coupled with a sharp slowdown in the Indian economy kept potential buyers at bay, data released by a leading industry body showed. Total sales of passenger cars stood at 110,212 units in January as against 113,894 units in the same month a year earlier, the Society of Indian Automobiles Manufacturers (SIAM) said. This was the sixth drop in domestic sales of passenger cars in the past seven months.

Meanwhile, commercial vehicle sales tumbled 51% to 23,157 units in January, while three-wheeler sales fell 12.3% to 26,439 units, data from SIAM revealed. Two-wheeler sales were down about 4% at 581,742 units last month with motorcycle sales falling 5.8% to 452,822 units and scooter sales rising 9% to 88,077 units. Overall, domestic sales of automobiles fell 7.4% to 768,688 units in January while exports rose 6.5% to 103,496 units

GSM firms add 9.3mn new subscribers

The cumulative all India GSM subscriber base has now grown to 267mn in Jan'09, up from 257mn in Dec’08, a growth of about 3.89% during the month of January 2009. Among all circles, Category C witnessed the highest rate of growth at nearly 4.19%. Category C circle was followed by Category B circle, which recorded a healthy growth of 3.98% over the previous month. Category A circle witnessed a growth of 3.28%.

The subscribers in Metro grew by 2.94% over the previous month, with Delhi recording the highest growth at 4.17% followed by Chennai at 3.81%.

Company wise break-up shows that Bharti Airtel added 2.73mn new customers in January while Vodafone Essar saw its subscriber base swell by 2.4mn new users. Idea Cellular added 2mn new customers, which includes subscribers of Spice Communications. State-run BSNL added around 1.31mn new customers.

Airlines hike fares…but Govt isn’t amused

Local airlines increased basic fares by discontinuing all the promotional offers, as they try to mitigate the impact from a sharp slowdown in demand for air travel amid a worsening global economic environment. While Air India, Jet Airways and Kingfisher Airlines hiked basic fares across sectors by an average of Rs1,200-1,800 per passenger. The Mumbai-Delhi sector's basic fare was increased by Rs1,800-2,200 per passenger. On the other hand, low-cost carriers like Indigo, Go Air and Spice Jet have hiked basic fares by an average of Rs2,000 per passenger on major routes.

But, the sudden fare hike by all airlines in the same day sparked speculation about an industry-wide arrangement. Civil Aviation Minister Praful Patel warned airlines against any price cartelization. As a result, Jet Airways decided to roll back the price increase. The Director General of Civil Aviation (DGCA) sought information regarding the airfare increase and transparency in airfare advertising. The MRTPC too decided to probe the matter.

RPower says it will finish all UMPPs on time

Reliance Power Ltd. said that it would be able to complete all its Ultra Mega Power Projects (UMPPs) of 4,000-megawatt each on schedule, and also plans to raise money to fund the same. The Anil Dhirubhai Ambani Group (ADAG) company won the coal-fired project at Tilaiya in Jharkhand after emerging as the lowest bidder. The company will build the plant as well as the UMPPs at Sasan and Krishnapatnam on time, CEO Jayarama Chalasani said in New Delhi. The company will need as much as Rs600bn to build the three plants and plans to borrow 75% of the funds, Chalasani told reporters. Reliance Power had bid Rs1.77 per unit for the Tilaiya plant, which is due to be completed by 2016, the CEO said.

Govt approves DIAL move to charge development fee

The Government approved the levy of Development Fee (DF) by the Delhi International Airport Ltd. (DIAL) at the rate of Rs.1300 per departing international passenger and at the rate of Rs200 per departing domestic passenger with effect from March 1. The DF is inclusive of all applicable taxes and is for a period of 36 months only. This approval shall be reviewed specifically upon achievement of certain milestones.

United Spirits mulls selling Whyte & Mackay stake: reports

United Spirits is reportedly planning to sell around 49% stake in Scotland-based Whyte & Mackay. The Vijay Mallya-promoted liquor giant plans to reduce its Rs71bn of debt by selling the Whyte & Mackay stake to a private equity investor, the report added. United Spirits had acquired Whyte & Mackay for £595mn in May 2007. "The divestment of up to 49% in Whyte & Mackay was always part of United Spirits' de-leveraging plan," a UB group spokesperson told reporters in New Delhi. He, however, declined to disclose further details.

The move is part of the United Spirits' plan to raise cash, including a strategic sale of up to 14.9% stake from the treasury stocks, for which it has had talks with Diageo recently. There have been reports that Diageo wants more than 15% in United Spirits, which means it will have to announce an open offer for another 20%.

BHEL wins orders worth Rs70bn

BHEL announced that it won four major contracts worth Rs70bn for the supply and installation of main plant equipment for thermal power projects. The projects, with a cumulative capacity of 3,250 MW, are located in Madhya Pradesh, Uttar Pradesh, Tamil Nadu and Maharashtra. The company has received orders from NTPC Ltd., NLC Tamil Nadu Power Ltd. (NTPL) and Mahagenco.

Ranbaxy gets USFDA approval for Imitrex

Ranbaxy Laboratories announced that it had received an approval from the USFDA to sell a generic version of GlaxoSmithKline Plc’s migraine pill Imitrex. The company got the approval to sell 100 milligram tablets of sumatriptan, the chemical name for Imitrex. The sumatriptan tablets will be manufactured in New Jersey. Imitrex and a low-dose, over-the-counter formula known as Imigran, recorded sales of over US$1bn in the first nine months of 2008 for Glaxo.

Unitech reschedules over 75% of debt

Unitech Ltd. announced that it has rescheduled more than 75% of its total debt of US$1.6bn, sending its shares higher amid expectations that the real estate major will improve its performance in the coming quarters. Unitech's debt stands at Rs80bn (US$1.6bn), of which Rs20bn would mature in the next one year, Sanjay Chandra, the New Delhi-based company's Managing Director, said. Unitech also said that it expects to receive Rs12.5bn this quarter, as part payment for the stake sale in its telecom venture to Norway's Telenor. Unitech sold a 60% stake in the wireless venture to Telenor for US$1.2bn last October.

TCS and Cisco sign strategic alliance

CISCO and Tata Consultancy Services (TCS) announced they have entered Into a strategic alliance to develop and deliver information technology (IT) service solutions to help customers build or evolve next-generation data centres by taking advantage of the network as a platform. Under the agreement, TCS will build a new technology practice focused on Cisco's Industry-leading data centre networking and security solutions. The companies also announced the formation of a Cisco Technology Lab at the TCS campus in Chennai. The Cisco technology lab will allow TCS to develop network-based data centre solutions, test frameworks, develop skills and certify employees in Cisco data centre technologies. The lab will also allow Cisco and TCS to illustrate proof-of-concepts and IT and networking methodologies for client-specific business processes.

TTML open offer begins on Feb 19

NTT DoCoMo Inc, along with Tata Sons Ltd. announced a revised schedule for the mandatory open offer for buying an additional 20% stake in Tata Teleservices Maharashtra Ltd. (TTML). The open offer will now begin on Feb. 19 and will close on March 12. Earlier, it was to open on January 8 and close on January 27, but was delayed due to non-receipt of regulatory approval from SEBI. DoCoMo acquired a 26% stake in Tata Teleservices (TTSL) for Rs130.7bn, in November and had given an open offer to acquire a 20% stake in TTML at Rs24.70 per share. TTSL is the unlisted parent of TTML. Recent media reports have suggested that capital market regulator SEBI had questioned the original open offer price and asked the companies to increase it in line with the valuation of TTSL, which owns 37.5% stake in TTML.

Edserv Softsystems IPO subscribed 1.30 times

The Initial Public Offer (IPO) of Edserv Softsystems Ltd., a web-learning, IT consulting and resource deployment company has been subscribed about 1.30 times as against 39,73,908 shares offered. The Qualified Institutional portion was subscribed by 1.08 times while Non-Institutional investor’s portion received a response of 3.10 times and the Retail portion was subscribed 1.0 times. The IPO opened on February 5 and closed on February 9. It was priced at a band of Rs55-60 through a 100% book-building route. The company would be listed on The Stock Exchange, Mumbai (BSE) and The National Stock Exchange (NSE)

Govt announces extra borrowing of Rs460bn

The Government will borrow an additional Rs460bn (US$9.44bn) from the market in four parts between Feb. 20 and March 20, Economic Affairs Secretary Ashok Chawla said in New Delhi. Apart from the debt sales that begin Feb. 20, the Government is scheduled to sell Rs80bn of debt on Feb. 13. The Centre has thus far raised Rs2.4 trillion through sale of securities in the fiscal year ending next month compared with Rs1.79 trillion it had budgeted to borrow at the start of the year. Bonds fell after the Government announced the additional borrowing plan. "We will ensure that the borrowing program is conducted in a non-disruptive manner," RBI Deputy Governor Shyamala Gopinath told reporters after the central bank and finance ministry officials met. The Government is borrowing more to bridge the revenue-expenditure gap, which has been ballooning on account of two stimulus packages and tax concessions granted to boost economic growth

Inflation slides due to fuel price cut

India's inflation, as measured by the wholesale price index (WPI), fell sharply in the last week of January after the Government cut retail price of fuels to match a sharp fall in crude oil prices. The point-to-point inflation declined to 4.39% in the week ended January 31 from 5.07% in the previous week, the Commerce & Industry Ministry said in a statement. Inflation was forecast to slip to around 4.4%. It was at 4.74% in the comparable period of last year. The WPI for "All Commodities" declined by 0.74% to 228.4 from 230.1 in the previous week.

The sharp fall in WPI and inflation was largely due to the fuel price cut that was announced by the Government on January 28. The Government had reduced the price of petrol by Rs5 per litre, diesel by Rs2 a litre and cooking gas by Rs25 per cylinder. Meanwhile, the Government inflation rate for the week ended Dec. 6, to 6.56% from the preliminary estimate of 6.84% while the WPI for the same period was revised to 230.5 from 231.1 earlier.

Weekly Stock Picks - Feb 15 2009

Buy Reliance Capital

Buy Maruti

Buy Axis Bank

Buy Bharti Airtel

Buy M&M

Weekly Newsletter - Feb 15 2009

The bulls seem to have got on a winning track this week with the main indices gaining over 3.5% each. While Inflation below 5% was on expected lines, poor Industrial Production numbers is something the markets have yet to come to terms with. The gains were led more on hopes of some goodies from the government as the vote-on-account is presented in Parliament on Monday.

The $789 billion stimulus compromise is set to pass and go on to President Obama for his signature. Incidentally, the US Market is closed on Monday for the President’s Day holiday. So a lot of local factors will come into play for the Indian markets on Monday. Depending on the announcements, stocks will see momentum. We reckon real estate and banking could be in the limelight in case of any positive developments. The RBI too may get into action and announce some measures to prop up sentiment.

FIIs have been net buyers of Indian equities to the tune of Rs5.21bn this month. The worry is will it sustain for long. Any spurt this week could be used to get out of counters and re-balance your portfolio.

India's scorching economic growth is estimated to slow sharply in the current fiscal year ending next month due to weak performance of the agriculture and manufacturing sectors, the Government said. However, the forecast by the Central Statistical Organisation (CSO) is still better than economists' consensus projection. The Gross Domestic Product (GDP) is estimated to have grown by 7.1% in the year ending March 31, 2009 as against a healthy 9% expansion in the previous financial year, the CSO said.

Agriculture sector is likely to grow by 2.6% versus 4.9% in the year ended March 2008. Manufacturing is forecast to have expanded by 4.1% compared to 8.2% in the year 2007-08. Services is expected to maintain a strong growth at 9.6% versus 10.9% in the previous fiscal year. Mining is estimated to grow at 4.7% as against 3.3% in the year ended March 31, 2008. Construction growth is seen at 6.5% compared to 10.1% last year while Financial Services sector is expected to grow by 8.6% versus 11.7% in the last financial year.

Lalu’s popular express chugs along

Union Railways Minister, Lalu Prasad started his last budget speech under the UPA in his usual inimitable style. He said that Indian Railways scaled a new pinnacle every year and now stand at the zenith of success from where, without imposing any burden on the common man, the railways are set to establish the historic landmark of earning a cash surplus before dividend of more than Rs900bn, in five years.

The same Railways which faced a paucity of funds for replacement of over aged assets in 2001 and which had to defer payment of Rs28bn as dividend to General Revenues, have now surprised the whole world with a historic financial turnaround.

The year 2008 witnessed a financial turmoil and worldwide recession making it difficult for even Fortune 500 companies to raise debt from the international markets. This august House would be pleasantly surprised to know, that even in such adverse times, the Indian Railway Finance Corporation, in November 2008, has successfully raised a Rs5bn loan, at a rate of only 4%, from the international market.

Freight rates for the fiscal year 2009-10 have been left unchanged, Union Railway Minister Lalu Prasad Yadav said while presenting the Interim Railway Budget in the Lok Sabha. He also said that passenger fares for Air-Conditioned (AC), Mail and Express fares have been cut by 2%. Lalu Yadav also added that the Indian Railways will start 43 new trains in the year ending March 2010.