Financials weigh heavy at US Market

Two better than expected economic reports fail to excite buyers

US Market kicked off the month of June on a low note today, Monday, 02 June, 2008 after the indices posted sufficient losses on the very first day of the month. Buyers did not show much interest as the month of June got underway despite two better-than-expected economic reports. The financial sector was the main laggard today as renewed angst over the possibility of further writedowns in the sector. But the decline was not just limited to the financial sector as weakness was broad-based with nine of the ten economic sectors ending the day lower. Energy was the lone gainer as oil prices crawled up marginally.

Among major economic news of the day in US, the May Institute of Supply Management (ISM) Index, a national manufacturing survey, rose 2.1% to 49.6, topping the consensus estimate of 48.5. The index suggests a slight contraction in manufacturing activity, as the number falls short of 50. Separately in another report, April construction spending fell 0.4% month-over-month, which was modestly better than the expected decline of 0.6%.

After lingering in the red for the entire day, the Dow Jones was down by more than 175 points at one point of time. But at the end, the Dow Jones industrial Average ended the day with a loss of 134 points at 12,506.82. The Nasdaq Composite Index, finished lower by 31.13 points at 2,491. S&P 500 finished lower by 14.71 points at 1,385.67.

Within the Nasdaq 100, 88% of stocks posted a loss. Apple, Qualcomm and Microsoft were the main laggards.

Concerns surrounding the weak U.S. economy and the earnings environment once again became today’s headliner. Standard & Poor's announced that it cut its debt ratings on investment banks Merrill Lynch, Lehman Brothers and Morgan Stanley. Separately, the outlook for JPMorgan Chase and Bank of America was lowered to negative from stable.

Financials were facing the most selling pressure today also after Wachovia’s board of directors ousted its CEO. On a similar note, Washington Mutual's CEO relinquished his Chairman position to an independent director.

Crude prices ended marginally higher for the second consecutive day today. Prices rose after concerns regarding demand for oil were eased. Prices also climbed because of a rally in the natural gas market, which advanced on signs that competition for the fuel will increase as the weather warms. The hurricane season in the Atlantic, which has the potential to disrupt oil and natural gas production in the Gulf of Mexico, officially began on 1 June. Crude-oil futures for light sweet crude for July delivery today closed at $127.76/barrel (higher by $0.41/barrel or 0.3%) on the New York Mercantile Exchange. Prices rose to a high of $129.35 earlier during the session.

At the currency markets on Monday, the dollar got a lift after U.S. manufacturing data were better than expected. The Institute for Supply Management's index for May improved to 49.6% from 48.6% in April, and came in above the 48.7% consensus expectation. But the dollar weakened on the heels of a decline in the broader U.S. stock market and stronger oil prices. Against this backdrop, the dollar index, which tracks the greenback against a basket of six major currencies, was at 72.910 as against previous closing of 73.107.

For tomorrow, the economic calendar features the release of factory orders data for April and the May figures for auto and truck sales. But the item of most interest will be Fed Chairman Bernanke's speech on the economic outlook at the International Monetary Conference that will be given at 9:00 AM ET. Other than that, home builder Toll Brothers is the most notable and will report its results before the start f trading.

Today's Pick - Moser Baer

We recommend a sell in Moser Baer India from a short-term perspective. The stock has been on an intermediate-term down trend from its January 2008 peak at Rs 344.

However, the corrective up move from March low of Rs 119 to May high of Rs 201 in the stock has retraced almost 38.2 per cent fibonacci retracement of its prior down move. After encountering resistance at around Rs 200, the stock resumed the downtrend. It tumbled 5 per cent, penetrating the 21-day moving average on June 2, 2008.

The daily momentum indicator is declining in the neutral region. The moving average convergence and divergence has displayed negative divergence and is indicating a sell. Our short-term outlook for the stock is bearish. We expect the stock to decline further until it hits our price target of Rs 150 in the short-term. Traders with short-term perspective can sell the stock while keeping the stop-loss at Rs 182 leve

via BL

Fall may extend

After coming under a sharp hammering in the last hour of the yesterday's trades, the market may correct further amid sharp fall in global indices. All the Asian indices have eased in morning trades, with Nikkei and Kospi index bearing the brunt with a fall over 1% each. However, the market may find some solace in the form of a FIIs buying equities worth Rs254.60 crore on Friday. On the technical front, the Nifty should find support at 4700 and a break below this level could see it slip further to 4660, while it may test higher levels around 4800. The Sensex has a likely support at 15950 and may face resistance at 16250.

US indices fell on Monday with the Dow Jones dropped 135 points at 12504 and the Nasdaq ended 31 points lower at 2492.

Execept MTNL and Dr Reddy, rest of the Indian floats had a weak outing on the US bourses. ICICI Bank led the slump and dropped over 6.20% followed by HDFC Bank moved down 5.39% while Satyam, Tata Motors, Rediff, Infosys, Wipro, VSNL and Patni Computer tumbled over 1-3% each. However, MTNL shrugged off the weak trend and rose nearly 13.83% and Dr Reddy was up over 2.64%.

Crude oil prices raised marginally on Monday. The Nymex light crude oil for July delivery gained by 41 cents to close at $127.76. In the commodity space, the Comex gold for August series advance by $5.40 to settle at $896.90 a troy ounce.

Trading Calls - June 3 2008

Nifty (4740) Supp 4630 Res 4820

Sell Educomp (3870) 3895
Target 3825, 3815

Sell Tata Power (1295) SL 1310 Target 1260, 1250

Sell Cairn (272) SL 277
Target 262, 259

Sell Adlabs (597) SL 603
Target 585, 580

Buy Dr Reddy's (720) SL 714
Target 732, 736

Float around, don’t fall

When you stand at the edge of the cliff, jump to fly, not to fall.

Our request not to get alarmed didn’t seem to go well as the Prime Minister’s signal of a fuel price hike increased worries about inflation. As a result, after a positive start, the key indices suddenly fell from the cliff. Sentiment also dipped (for lack of other reasons) after the RSP - member of the Left Front - decided to pull out from the UPA-Left coordination committee. Such political developments need not cause much worry but the bulls seem to take it as an indication of further trouble for the fragile Congress-led coalition in the run up to next year's general elections. Then there were fresh worries over the global financial turmoil after UK lender Bradford & Bingley revised its rights issue at a 33% discount and warned that conditions were getting worse. Later in the evening, US shares slipped after S&P slashed its ratings and outlook on top Wall Street firms. Management shakeup at Wachovia and Washington Mutual also stoked renewed worries about the health of the global financial sector.

We expect our market to extend yesterday's selloff, given the plethora of negative factors, both local and global. Also, technical and F&O indicators are far from positive, and signal more pain in the immediate future. Select buying may always take place at lower levels. Review your financial comfort before adding stocks. Remain cautious at this juncture as the undertone has suddenly taken a reverse swing. FIIs continue to be net sellers. Supporting the market at this juncture is not on anyone’s agenda. 4800 was seen as a big support for the Nifty. But, that level was breached quite easily yesterday. The put-call ratio of option contracts expiring in June is also indicating further slide. Nifty futures continues to trade at a discount to the spot index and saw addition in its open interest, suggesting fresh build up in short positions. It remains to be seen if these shorts will get covered over the next few days or will there be further increase. Given this backdrop, one has no choice but to stay on the sidelines before there is more clarity on the market's direction.

DLF and Engineers India will declare their results today.

Asian stocks declined for the first time in four days, led by banks, on concern that credit-market losses will widen as the US housing market deteriorates and global growth slows.

Macquarie, Australia's No. 1 investment bank, and Nomura Holdings, Japan's biggest, dropped after S &P lowered its debt ratings on three of Wall Street's biggest securities firms. Babcock & Brown declined in Sydney after Wachovia ousted its CEO and Washington Mutuals' CEO relinquished his role as chairman.

The MSCI Asia Pacific Index lost 1% to 150.35 as of 10:54 a.m. in Tokyo, ending a three-day, 3.4% rally. An index of financial companies was the biggest drag among the benchmark index's 10 industry groups.

Japan's Nikkei 225 Stock Average fell 1.9% to 14,172.13. Kajima Corp., Japan's largest general contractor, led declines after Credit Suisse downgraded its shares. Asian equity markets open for trading retreated apart from Malaysia and China, which were little changed.

US stocks fell for the first time in five days amid renewed worries about the financial sector after S&P cut its debt rating on a number of banks, and Wachovia and Washington Mutual announced management shakeups.

Wachovia slid to the lowest level since 1995 after saying Kennedy Thompson will step down. Morgan Stanley, Merrill Lynch and Lehman Brothers tumbled after S&P said the firms will be forced to report more writedowns.

Marriott International spurred declines in consumer shares as the largest hotel chain said lower US demand is hurting revenue growth.

The S&P 500 Index lost 14.71 points, or 1.1%, to 1,385.67. The Dow Jones Industrial Average dropped 134.50 points, or 1.1%, at 12,503.82. The Nasdaq Composite Index slid 31.13 points, or 1.2%, to 2,491.53.

Market breadth was negative. Three stocks dropped for each that rose on the New York Stock Exchange.

Tuesday brings the April reading on factory orders, while reports are due later in the week on employment, productivity and the services sector of the economy.

Tuesday morning also brings a speech from Federal Reserve Chairman Ben Bernanke on the economic outlook. Bernanke is speaking at the International Monetary Conference in Madrid.

The CEO of Wachovia has been asked to step down by its board, following what the company termed as a series of setbacks that have weighed on performance. Shares fell 1.7%. Washington Mutual said its CEO will no longer be its chairman, as the company struggles to return to profitability. Shares were flat.

The Institute for Supply Management said manufacturing activity contracted in May for the fourth straight month. However, the index still showed more strength than what economists had expected. The ISM index rose to 49.6 in May versus forecasts for a decline to 48.5.

Construction spending fell 0.4% in April, the government reported, after dropping 0.6% in March. Economists had forecast a decline of 0.6%.

US light crude oil for July delivery rose 41 cents to settle at $127.76 a barrel on the New York Mercantile Exchange.

The national average price for a gallon of regular unleaded gas held at $3.975, AAA said, matching Sunday's record. That breaks a streak of 26 days of gains and 25 days of record highs.

The US dollar rose versus the euro, continuing its recent recovery. Against the yen, the dollar slipped. Treasury prices rose, lowering the yield on the 10-year note to 3.96% from 4.06% late on Friday. COMEX gold for August delivery rose $5.50 to settle at $897 an ounce.

European shares dropped, retreating for the first time in five sessions after British lender Bradford & Bingley cut the amount of money it will raise via a share issue and issued a profit warning.

The pan-European Dow Jones Stoxx 600 index fell 1.1% to 318.44 in Monday dealings, dragged lower by banking-sector losses as well as drops for automakers. The French CAC-40 dropped 1.6% to 4,935.21, while Germany's DAX 30 declined 1.2% to 7,008.77 and the UK's FTSE 100 lost 0.8% to 6,007.60.

Brazilian and Mexican stocks ended lower as well. Brazil's Bovespa fell 0.7% to 72,051.49 while Mexico's IPC fell 1.1% to 31,636.21. Among the other emerging markets, Russia's RTS index was down 0.3% at 2452 while the ISE National-30 index in Turkey was up 0.6% at 48,788.

More pain likely

Key indices fell sharply in the late afternoon trading session, dragging the BSE 30-share Sensex below 16k levels during intra-day trade. Concerns over the rising inflation and uncertainty over the interest rate scenario continued to keep bulls under pressure. Further, reports that Left constituents RSP has threatened to withdraw from UPA Left Coordination Panel created doubts in the minds of traders and investors.

After a positive opening, markets eventually closed near day’s low on back of selling across-the-board. All the major sectoral indices closed in red. However, auto stocks survived the carnage on back of impressive monthly auto sales numbers.

Among the index heavyweights, RIL, HDFC, Hindalco and Tata steel were among the major losers. With European markets opening lower in the range of 1-2%, markets fell in a heap from day’s high. Finally, the Sensex closed at 16063 down 2% and Nifty fell by 2.68% to close at 4739.6

Punj Lloyd stock closed at Rs287.05 down by 10.5%. The company posted quarterly revenues of Rs23467, up by 38% yoy and PAT up 32% to Rs1177 yoy. The scrip touched an intra-day high of Rs325.05 and a low of Rs280 and recorded volumes of over 25,61,499 shares on BSE.

Sterlite Industries was up by 2.8% to Rs934.9 after the company announced to buy operating assets of Asarco, a US based mining, smelting and refining firm for US$2.6bn. The scrip closed at Rs916.7 around 1.95% down before touching an intra-day high of Rs955 and a low of Rs910 and recorded volumes of over 2,39,105 shares on BSE.

Essar Oil surged 6% to close at Rs236 as the company reportedly bids for an offshore block in Australia and is in talks with foreign companies to explore oil in Egypt and Yemen. Essar Oil also announced that it would raise fresh debt of up to US$5bn through ECB. The scrip touched an intra-day high of Rs243 and a low of Rs225 and recorded volumes of over 77,69,633 shares on BSE.

Among the auto stocks, Hero Honda and Bajaj Auto were the major gainers after the auto companies announced their monthly sales figures. Bajaj Auto posted 7.6% growth in motorcycles sales in May and Hero Honda motorcycles sales growth rose 9.5%

Corporate News

Tata Motors has acquired the Jaguar Land Rover business from Ford Motor for a net consideration of US$2.3bn. (ET)
Bharti Airtel and US based VeriSign enter into 3 year arrangement for developing security solutions for Indian corporates. (ET)
Infosys has bagged patents for mobile tech, holography from the US Patent and Trademark Office. (ET)
Axis Bank and Yes Bank are securitizing loans worth over Rs10bn that were extended to HPCL and BPCL. (BS)
Ambuja Cement is set to buy a stake in ACC’s ready-mix concrete subsidiary – ACC Concrete. (ET)
ICICI Bank has raised interest rates on credit cards. (BL)
The financial closure of the Krishnapatnam UMPP of Reliance Power would be achieved in the coming three months. (BL)
SBI has launched its Agriculture Debt Waiver and Debt Relief Scheme-2008 in Jamli village near Indore. (BS)
GAIL India says its 100% subsidiary GAIL Gas will take up city gas distribution projects in 17 cities in the first phase. (BL)
IOC is in initial phase of discussions with ITC for merchandise supplies from the latter’s Choupal Sagar stores for its 2,050 kisan seva kendra (KSK) outlets across the country. (FE)
Videocon-promoted Datacom will invite bids for rolling out 70mn GSM mobile lines envisaging an investment of over Rs120bn in the next four years. (ET)
Jet Airways, SpiceJet, Kingfisher and other airlines have told the government they would curtail services frequency and air routes to cut losses after oil companies raised ATF prices by 18.5%. (BS)
The Kingfisher-Deccan combine has decided to increase fuel surcharge by Rs300-550. (BL)
Jindal Steel & Power is planning to build a Rs50bn, 1,080-mw, coal-fired captive power plant in Orissa. (BS)
Hexaware has appointed Mr P.R. Chandrasekar as the CEO and Vice-Chairman and Prateek Aggarwal as the CFO of the company. (BL)
HCL Info, HP, LG and Zenith are raising prices of personal computers (laptops and desktops), LCDs and plasma TVs, and IT peripherals by up to 13%. (BS)
The Allahabad Bank board has approved the proposal to raise about Rs1.5bn from selling rights shares to stakeholders. (BS)
Emami and a string of entities acting in concert purchased 23.6% stake from one of the promoter groups of Zandu Pharma at Rs6,900 per share for Rs1.3bn. (BL)
The Parikh family, co-promoters of Zandu Pharma is not in favour of selling its stake to Emami. (ET)
Dabur Group and the US-based Liberty Mutual Group have announced their plan to form a non-life insurance company. (BL)
The department of fertilizers has asked RCF to go ahead with the pre-project and pre-investment activities for the revival of Hindustan Fertiliser Corporation’s (HFC) Durgapur plant and Fertiliser Corporation of India’s (FCI) Talcher unit. (FE)
As part of its diversification plans, Omaxe is eyeing the power sector through its new subsidiary Omaxe Power. (BS)
Indus Fila is planning to invest Rs2bn in retail and set up 30-40 retail outlets within a year. (BS)
Sobha Developers is foraying into Mysore realty market with three projects. (BS)
Logix Microsystems will soon open an advanced photography studio in Brussels as part of its plans to enter the European market. (BS)
TDSAT has restrained BSNL from disconnecting Tata Tele over non-payment of access deficit charge. (BS)
Tamil Nadu Newsprint and Papers plans to tie up with other paper mills to get the surplus pulp converted to paper. (BL)
Bharat Gears has wiped out all its accumulated losses and has drawn up capex plans to cater to higher demand as well as technological upgradation. (BL)
The Burmans (Dabur group) plans to foray into clinical services segment through OncQuest, a privately held company. (ET)
Spanco BPO, the hived-off BPO unit of Spanco Telesystems is on the lookout for a Rs1bn KPO buy. (DNA)
Phoenix Mills is in the process of forming a separate company to manage all its real estate assets. (ET)
Vodafone has offered SouthAfrica’s Telkom to buy a further 12.5% stake in mobile operator Vodacom for US$2.47bn. (ET)
Tata Sky has cut its subscription rates. (ET)

NTPC

NTPC

Technicals - June 3 2008

Technicals - June 3 2008

Daily Technicals - June 3 2008

Daily Technicals - June 3 2008

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Punj Lloyd, Lanco Infratech, Colgate, Tata Tea, Nagarjuna Constructions, Sobha Developers, ONGC, BGR Energy Systems, India Strategy, India Economy, India Energy

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Marginal gain for precious metals

Gold prices still remain below $900 level

Precious metals ended little higher on Monday, 02 June, 2008. A sell-off in the US stock market prompted the rise in the bullion metal prices. But nevertheless, gold prices ended below $900/ounce.

Comex Gold for August delivery rose $5.5 (0.5%) to close at $897 ounce on the New York Mercantile Exchange. It fell to an intra day low of $890. Lst week, gold prices ended lower by 4.2%. But for the month of May, it ended with a gain of higher by $22.5 (2.5%). On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped since then.

During May, overall strength in the U.S. dollar and recent declines in oil prices in last week helped to dull investment appeal for the precious metal, which is often used as a hedge against inflation.

This year, gold prices have gained 7% for the till date against a 6.8% drop for the dollar against the euro. Before May, for April, prices closed lower by 6.3%. For first quarter prices gained 10.7%. In January, prices gained 11%, the highest monthly gain since April 2006. For February, it gained 6%. But in March, prices succumbed and fell by 5.5%.

On Monday, Comex silver futures for July delivery rose 4 cents (0.04%) to $16.91 an ounce. Silver has gained 13.6% in 2008 till date. It finished 7.5% lower last week.

Silver prices ended the month of May 2008 with a gain of 2.7%. For April, it closed lower by 5.5%. Silver had gained 16% in Q1. In January this year itself, prices climbed 14%. In February, it gained another 15%. For March, it ended lower by 13%. The metal had climbed 16% in FY 2007. The metal also has gained for seven straight years.

The weakening dollar and higher global demand for raw materials have led to records this year for commodities including gold. Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices. Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies. On the other hand, a lower dollar pushes up precious metal prices as their demand lessens as it becomes cheaper for traders holding other currencies.

At the currency markets on Monday, the dollar got a lift after U.S. manufacturing data were better than expected. The Institute for Supply Management's index for May improved to 49.6% from 48.6% in April, and came in above the 48.7% consensus expectation. But the dollar weakened on the heels of a decline in the broader U.S. stock market and stronger oil prices. Against this backdrop, the dollar index, which tracks the greenback against a basket of six major currencies, was at 72.910 as against previous closing of 73.107.

Dollar weakness typically benefits dollar-denominated commodities, such as gold and crude oil, because it makes them cheaper for holders of other currencies. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.

In the energy market today, crude price ended little higher as demand concerns eased partly after the manufacturing report.

Gold witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. In 2006, silver had jumped 46% while gold gained 23%.

Since last September, Fed has axed interest rates seven times and brought it down to 2%. The ECB has kept rates unchanged at 4% since June, 2007.

At the MCX, gold prices for June delivery closed higher by Rs 91 (0.75%) at Rs 12,290 per 10 grams. Prices rose to a high of Rs 12,358 per 10 grams and fell to a low of Rs 12,040 per 10 grams during the day’s trading.

At the MCX, silver prices for July delivery closed Rs 89 (0.4%) higher at Rs 23,465/Kg. Prices opened at Rs 23,245/kg and rose to a high of Rs 23,530/Kg during the day’s trading.

Another day of gains for Crude oil

Crude oil and natural gas end month 12% and 8% higher respectively

Crude prices ended marginally higher for the second consecutive day on Monday, 02 June, 2008. Prices rose after concerns regarding demand for oil were eased. Prices also climbed because of a rally in the natural gas market, which advanced on signs that competition for the fuel will increase as the weather warms. The hurricane season in the Atlantic, which has the potential to disrupt oil and natural gas production in the Gulf of Mexico, officially began on 1 June.

Crude-oil futures for light sweet crude for July delivery today closed at $127.76/barrel (higher by $0.41/barrel or 0.3%) on the New York Mercantile Exchange. Prices rose to a high of $129.35 earlier during the session.

Last week, crude prices closed lower by 3.7%. Previous during the month of May, 2008 prices had touched an all time high of $135.09. For the year, crude is up by 32.3% till date. Prices have more than doubled on a yearly basis.

At the currency markets on Monday, the dollar got a lift after U.S. manufacturing data were better than expected. The Institute for Supply Management's index for May improved to 49.6% from 48.6% in April, and came in above the 48.7% consensus expectation. But the dollar weakened on the heels of a decline in the broader U.S. stock market and stronger oil prices. Against this backdrop, the dollar index, which tracks the greenback against a basket of six major currencies, was at 72.910 as against previous closing of 73.107.

But on a positive note, the ISM report eased the demand concerns in the crude market in the coming months.

Dollar weakness typically benefits dollar-denominated commodities, such as gold and crude oil, because it makes them cheaper for holders of other currencies. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.

Natural gas rises to the highest since December 2005

Brent crude oil for June settlement today fell $0.28 (0.2%) to $128.02 on the London-based ICE Futures Europe exchange. The London benchmark rose 54% in FY 2007, the most since 1999 when prices more than doubled.

Natural gas rose to the highest since December 2005 amid speculation competition for gas to put into storage will increase as the weather warms. Natural gas for July delivery rose 26.6 cents (2.3%) to settle at $11.969 per million British thermal units.

Against this backdrop, reformulated gasoline for July delivery closed up 4 cents at $3.39 a gallon in New York, while July heating oil finished at $3.72 a gallon, up 5 cents.

Crude had ended FY 2007 substantially higher by $35 or 57%. It was crude’s biggest yearly gain in five years.

At the MCX, crude oil for June delivery closed at Rs 5,443/barrel, higher by Rs 40 (0.7%) against previous day’s close. Natural gas for July delivery closed at Rs 512.6/mmbtu, higher by Rs 15.3/mmbtu (3.1%).

Piramal Life Sciences

Piramal Life Sciences

Real problems for realty stocks

The uncertainty in the capital market has hit realty stocks the hardest.

The BSE realty index is the worst performer this year, having shed 51% of its 52-week peak reached in January.

With increasing evidence of a slowdown in the realty sector, rising input costs and little chances of interest rate softening, experts feel realty stocks may see further dip in valuations.

The BSE benchmark index Sensex has shed 24% since January while power stocks, which had a fantastic rally before the January crash, have lost 42% of their 52-week peak. Other major losers include bank (41%), consumer durables (41%), capital goods (39%), PSU (39%) and oil and gas index (28%).

"Realty and power stocks had run quite high in 2007, and that’s why when they started coming down, the fall was more pronounced," says Centrum Capital research head Harendra Kumar.

Investors were factoring in higher profits, but now with the sector in the throes of a slowdown, they are scaling down their expectations leading to fall in prices, he added.

The country’s largest property firm DLF’s scrip lost 54% while Unitech shed 64% from its peak. The scrips of Delhi-based Parsvnath and Omaxe have lost 68% each since January.

Real estate sector is seeing a major slowdown in the sales volume in most markets of the country. The speculators have exited the market and Mumbai and NCR, the biggest real estate markets in the country, are seeing subdued sales.

In Gurgaon and Noida, which had seen prices almost treble in four years, sales are down 70%, leading to a price correction of 10-20%. Centrum’s Harendra Kumar says if the negative newsflow continues for the realty sector, the scrips may see a further dip.

"The scenario has changed since end-2007 when the consumers expected interest rates to soften. We are faced with such a high inflation rate that interest rates are unlikely to come down for 6-9 months," says Angel Broking research head Hitesh Agrawal, adding the demand for real estate will remain subdued at such a high interest rate.

"Rising steel and cement prices have increased the input cost for developers while credit has been tightening with banks becoming selective in lending," says Mr Agrawal.

Rupee falls on market fall

Ends at 42.40/41 per dollar

Indian rupee was knocked off early highs on Monday as the sharemarket tumbled on worries of a rift in the ruling coalition, raising concerns about foreigners selling investments and repatriating their holdings.

Rupee ended at 42.40/41 per dollar as against Friday's close of 42.45/46.