India Real Estate Sector
Saturday, April 25, 2009
Market rises for the seventh week in a row
Bulls are on the rampage with the market surging for the seventh week in a row on the back of sustained buying by foreign funds amid signs of improvement in the Indian economy, possibility of further reduction in interest rates with inflation at near zero and on easing credit crunch.
The RBI, as part of its Annual Credit Policy, cut its key short-term rates by 25 basis points each on Tuesday, 21 April 2009, to prop up growth amid global economic slowdown. The repo rate, at which the RBI lends to the banks, was cut to 4.75%, and the reverse repo rate, at which the RBI absorbs excess cash from banks, was reduced to 3.25%, effective immediately. The bank rate, used by banks to price long-term loans, remained at 6%. Banks' cash reserve requirements (CRR) were also left unchanged at 5%.
Inflation based on the wholesale price index (WPI) rose 0.26% in the year through 11 April 2009, higher than previous week's 0.18% rise, data released by the government on 23 April 2009, showed.
FII inflow in April 2009 totaled Rs 4,860.40 crore, while the outflow in calendar year 2009 totaled Rs 1,811.20 crore (till 23 April 2009).
The 30-share BSE Sensex jumped 305.96 points or 2.78% to 11,329.05, in week ended 24 April 2009. It was the biggest closing level for the Sensex in more than six months. The broader 50-unit Nifty jumped 96.35 points, or 2.84%, to 3480.75 in the week.
The BSE Mid-Cap index gained 127.49 points or 3.67% to 3,600.09 and the BSE Small-Cap index advanced 116.7 points or 2.95% to 4,068.26 in the week.
Trading for the week started on a dull note. Key benchmark indices edged lower on 20 April 2009, as investors resorted to profit taking after a recent sharp surge in share prices. The BSE 30-share Sensex fell 43.59 points or 0.4% to 10,979.50. The S&P CNX Nifty fell 7.30 points or 0.22% to 3,377.10.
On Tuesday, 21 April 2009, key benchmark indices settled in the red in a day of high volatility triggered volatility in index heavyweight Reliance Industries. Rate sensitive banking and auto stocks fell even as realty stocks gained after the central bank cut short-term interest rates. The BSE 30-share Sensex fell 81.39 points or 0.74% to 10,898.11. The S&P CNX Nifty fell 11.80 points or 0.35% to 3,365.30.
The market fell for the third straight day on 22 April 2009, led by fall in realty, capital goods and auto stocks. Political uncertainty weighed on the market with polling for India's 15th Lok Sabha underway. The BSE 30-share Sensex fell 80.57 points or 0.74% to 10,817.54. The S&P CNX Nifty fell 35 points or 1.04% to 3,330.30.
Bulls were back on 23 April 2009, as key benchmark indices reversed three days losses on firm global markets. IT, metal, realty, banking and auto stocks jumped that day. The BSE 30-share Sensex rose 317.45 points or 2.93% to 11,134.99. The S&P CNX Nifty rose 93.40 points or 2.8% to 3,423.70.
Indices closed higher on 24 April 2009, after sentiments turned bullish with a strong opening of European markets. Rate sensitives like realty and banks lead the rally. The BSE 30-share Sensex rose 194.06 points or 1.74% to 11,329.05. The S&P CNX Nifty rose 57.05 points or 1.67% to 3480.75.
India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 3.90% in the week. Its net profit fell 9.35% to Rs 3546 crore on 23.9% fall in sales to Rs 28,362 crore in Q4 March 2009 over Q4 March 2008. The company announced results after the market hours on Thursday, 23 April 2009.
Rate sensitive real estate shares rose on hopes lower rates will spur housing demand. DLF (up 5.01%), Indiabulls Real Estate (up 14.56%), and Housing Development & Infrastructure (up 19.32%), spurted. Most of the realty deals including sale of commercial property and housing sales is driven by finance.
Banking stocks mostly rose on hopes falling interest rates will boost lending growth. India's largest bank in terms of assets and branch network State Bank of India (SBI) rose 0.11%. SBI chairman O.P. Bhatt on 21 April 2009 said interest rate cuts by the Reserve Bank of India were a signal for commercial banks to lower their rates. He said a decision on whether SBI would lower rates would be taken after a meeting of the bank's asset-liability. SBI's advance tax payment jumped 27.64% to Rs 1810 crore in Q4 March 2009 over Q4 March 2008.
India's largest private sector bank by net profit ICICI Bank fell 2.03% ahead of its Q4 March 2009 results on 25 April 2009. A total of 13 brokerages expect a between 2.2% to 45.8% fall in net profit to between Rs 623.30 crore to Rs 1124 crore in Q4 March 2009 over Q4 March 2008. Its American depository receipts (ADR) jumped 9.34% on Thursday, 23 April 2009.
ICICI Bank cut its lending rates by 50 basis points after the central bank cut official interest rates on 21 April 2009. The benchmark advance rate, or the rate that it charges its top customers, now stands at 16.25% from 16.75%, effective from 22 April 2009.
ICICI Bank also cut rates for retail customers by 50 basis points. The rates on deposits have been cut between 25 to 50 basis points, with effect from Friday 24 April 2009, the bank said.
India's second largest private sector bank by operating income HDFC Bank rose 3.91% on strong Q4 results. The banks' net profit rose 33.9% to Rs 630.88 crore on 53.1% rise in operating income to Rs 5,365,52 crore in Q4 March 2009 over Q4 March 2008. The results were more or less in line with market expectations. The bank announced the results after trading hours on 23 April 2009.
HDFC bank's gross non performing assets (NPA) stood at 1.98% of advances as of 31 March 2009 compared to 1.91% as of 31 December 2008. Net NPA as of 31 March 2009 was at 0.63% of net advances.
Auto shares rose on hopes lower interest rates would spur demand for vehicles which is mainly driven by finance. Mahindra & Mahindra (rose 4.93%), Tata Motors (up 6.81%) and Hero Honda Motors (up 3.29%), spurted.
India's largest car maker by sales Maruti Suzki India fell 4.19%. The company's net profit fell 18.32% to Rs 243.13 crore in Q4 March 2009 over Q4 March 2008. The results hit the market on 24 April 2009.
Outsourcing focussed IT stocks recovered on hopes aggressive measures by the United States to revive the economy may bear fruit. US is the biggest market for Indian IT firms. India's largest software services exporter by sales TCS rose 1.67%.
India's third largest software services exporter Wipro rose 13.71%. Wipro reported 14.8% rise in Q4 consolidated net profit at Rs 1010 crore on 13.5% rise in total income to Rs 6,583.20 crore in Q4 March 2009 over Q4 March 2008. The company announced the results on 22 April 2009.
Wipro has forecast between $1.009 billion and $1.025 billion in revenue from information technology services in the quarter ending 30 June 2009, lower than the $1.058 billion posted in the three months ended 31 March 2009.
Wipro Chairman Azim Premji said the company did a major re-organization of its software business at the beginning of the last financial year and hopes to emerge stronger than before. Chief Financial Officer Suresh Senapaty said operating margins for the software business expanded to 21.8% during the quarter from 21% in year-earlier period, in spite of lower business volumes.
India's second largest software services exporter Infosys Technologies rose 3.98%. Its consolidated net profit as per Indian GAAP declined 1.7% to Rs 1613 crore on a 2.6% decline in sales to Rs 5635 crore in Q4 March 2009 over Q3 December 2008.
Derivatives expiry may cause volatility
Volatility may rule the roost in a truncated trading week with only 3 trading days. Volatility is likely to zoom due to the expiry of derivatives contracts for April 2009 series on Wednesday, 29 April 2009. With earnings season on, investors focus will be on companies about to declare their March 2009 quarterly results.
The stock market will remain shut on Thursday, 30 April 2009 as voting takes place in Mumbai for the parliamentary elections on that day. The market is also shut on Friday, 1 May 2009, on account of Maharashtra Day.
Among the frontline companies, Jaiprakash Associates, Sterlite Industries (India), Infrastructure Development Finance Company, Reliance Capital and Bharti Airtel will declare their March 2009 quarterly results in the forthcoming week.
Bank of Baroda, Indian Bank, Pantaloon Retail (India), Petronet LNG, United Spirits, Shree Renuka Sugars, Central Bank of India, Syndicate Bank, Biocon, Aditya Birla Nuvo, Vijaya Bank, Mahanagar Telephone Nigam, GVK Power & Infrastructure, Titan Industries and Canara Bank among others will also unveil their March 2009 quarterly results in the forthcoming week.
Earnings unveiled by Indian companies so far have been better than expectations. Aggregate results of 184 firms showed net profit fell 0.1% on 0.4% rise in sales in Q4 March 2009 over Q4 March 2008.
Political uncertainty may lead to volatile swings on the bourses in the next few week with polling underway for India's 15th Lok Sabha. The month-long parliamentary elections that began on 16 April 2009 will conclude on 13 May 2009 with results due on 16 May 2009. Poll estimates point to a fractured mandate.
Firm global cues and buying support from foreign institutional investors triggered a solid 3168.65 points or 38.82% surge in the BSE 30-share Sensex to 11,329.05 on 24 April 2009 from a 3-year closing low of 8,160.40 on 9 March 2009.
Foreign institutional investors (FIIs) inflow in April 2009 totaled Rs 4,548.70 crore (till 22 April 2009), cutting their calendar 2009 outflow to Rs 2,122.90 crore. Earlier, they had resorted to heavy selling of Indian stocks in the first two months of calendar 2009.
Foreign institutional investors (FIIs) inflow in April 2009 totaled Rs 4,548.70 crore (till 22 April 2009), cutting their calendar 2009 outflow to Rs 2,122.90 crore. Earlier, they had resorted to heavy selling of Indian stocks in the first two months of calendar 2009.
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