The Sensex will hover around 17,600 before the next move
The market witnessed a subdued closing today, as traders rolled over their position in the derivatives segment from the near-month June contracts to July contracts ahead of the expiry of the near-month June derivatives contracts on Thursday (24th June). The Sensex settled lower at 17,749, down 126 points (0.7%) and the Nifty ended at 5,316, down 36 points (0.7%). The indices started the day on a negative note, taking cues from the Asian markets. Trading was range-bound till mid-morning. The market recovered from there and gained till early afternoon. However, it slid from there to shut in the red.
Asian stocks were down on Tuesday on concerns over Europe's economic crisis after Fitch Ratings cut its debt rating on French bank BNP Paribas SA. Fitch reduced BNP's long-term rating to AA-minus, the fourth-highest investment grade, from AA on deteriorating asset quality. Key benchmark indices in Japan, South Korea, Singapore, Indonesia, Hong Kong and Taiwan fell by 0.2% to 1.2%.
US indices closed lower on Monday. The Dow was down 8.2 points (0.08%) at 10,442. The S&P 500 was down 4.3 points (0.3%) at 1,113. The Nasdaq was down 20.7 points (0.9%) at 2,289.
Japan has set an ambitious target to control its fiscal deficit. The government pledged to do its utmost to keep new debt issuance in the year to next March at or below about 44 trillion yen ($483 billion) that has been earmarked for this year, while aiming to steadily reduce bond issuance thereafter.
Back home, a bumper harvest prospect because of a good monsoon has livened up the possibility that India should lift the export ban on non-basmati rice. India is the world's second-largest exporter of rice. Thailand banned exports of non-basmati rice in 2008, as high prices of the grain put pressure on domestic supply.
The government will decide on the fuel price hike on Friday. Earlier this month, the government deferred a decision on raising fuel prices, the second time in a year, which is a politically-sensitive reform measure.
Foreign institutional investors were net buyers of equities worth Rs1,564 crore on Monday. Domestic institutional investors were net sellers of Rs 561 crore.
Hindustan Dorr-Oliver (up 0.5%) has joined hands with Bronswerk Heat Transfer BV, Netherlands, a technology and manufacturing company that supplies air-cooled heat exchangers and high-pressure heat exchangers to various process plants, process license holders, plant construction companies and leading global consultants.
L&T (down 0.8%) thermal power plant construction business unit has secured two orders aggregating Rs827 crore from GVK Power for the latter's Gautami Combined Cycle Power Plant Expansion and from SEPCO-I for the Talwandi Sabo Power Plant in Punjab.
JIK Industries (down 2.9%) has successfully commenced its showroom in south Mumbai and is planning expansion in the form of own retail stores, franchise stores, shop-in shop, etc. The company will be focusing on development of new designs and increase of profits in this segment. There is no significant competition in its product profile. The company is considering floating a subsidiary abroad and increase its focus and capabilities in the high-end luxury product segment and export to Europe and the Middle-East.
Price band fixed at Rs230-Rs240
The initial public offer (IPO) of Technofab Engineering Ltd, an engineering, procurement & construction (EPC) company, will open on 29th June and close on 2nd July. The shares will be offered at a price band of Rs230 to Rs240.
The company will mop up Rs68.77-Rs71.76 crore, depending on the final issue price.
Between FY07-08 and FY09-10, Technofab\'s sales increased at a compounded annual growth rate (CAGR) of 48% and profit after tax (PAT) increased at a CAGR of 189%. Its order book stands at Rs533.74 crore as on 31 March 2010.
The company said it has placed bids for around 41 projects, worth Rs2,200 crore, in power, oil & gas and steel sectors. It expects to be the lowest bidder for around five projects worth Rs400 crore, all in the power sector.
Technofab has a presence in power, industrial infrastructure, water and oil & gas sectors and is planning to enter the railways and transport segments.
The company has operations in India, Kenya, Ethiopia, Ghana and Fiji. It plans to look for opportunities mainly in countries with projects funded by the World Bank or similar organisations.
The industry is now offering unadvertised discounts to customers, after sky-high realty prices kept buyers away from the market
Developers in Mumbai have finally started offering discounts on properties. Orchid Woods, a residential project in Goregaon (a Mumbai suburb) by DB Realty, is offering customers through ICICI Home Search, (a division of ICICI Home Finance Company) flats ranging from two bedroom, hall and kitchen (2 BHK of 1,420 sq ft), 2.5 BHK (1,635 sq ft), 3 BHK (1,820 sq ft) and 4 BHK (2,465 sq ft) at Rs9,500 per sq ft plus Rs45 per sq ft for floor rise.
All the flats at Orchid Woods are currently priced at Rs10,881 per sq ft. The discount offer is valid till 30th June or 20 apartments sold, whichever is earlier. As the monsoon is approaching, there might be more discounts on the platter for customers. During the rains, developers usually find it difficult to push sales. Now they have started to offer discounts.
"The prices of properties might not see a rise till September and we expect a slowdown in sales during the next quarter due to rains and holidays. But going forward, by October, we shall see a price rise of 10% as we approach the festival season. Usually during that period, the sales pick-up and demand comes back to the market," said Mayur Shah, chief sales-business unit, Ackruti City Ltd.
Pankaj Kapoor, founder, Liases Foras, believes that current trends are indicative of another asset bubble. "In the quarter ended March 2010, prices have gone up further by 15%-20% and we are estimating sales to be down further by 25%-30%. Despite the gradual decline in sales and market efficiency, the rise in property prices is indicating the creation of another asset bubble."
Mumbai is expected to report lesser volume of real-estate transactions over the next six months, according to industry experts. "We are going to see lower volumes of transactions in the next six months compared to the last six months, if the prices do not come down," said Pranay Vakil, chairman, Knight Frank (India) Pvt Ltd.
"More realty companies will offer discounts as sales are not taking place," said Sheetal Malpani, analyst, BRICS Securities Ltd. According to industry sources, developers are not publishing the discounts that they are offering. They are offering discounts to customers personally as published discounts would bring down the valuation of their projects. It is likely that developers will not advertise discounts till September. If sales do not pick up, they will be forced to openly advertise discounts to clear inventories and also to free up liquidity.