HDIL not to increase property prices as commodity cost falls

HDIL is planning to pass the benefit of low commodity prices to consumers by not hiking the prices of its properties

Housing Development and Infrastructure Ltd (HDIL) has said that it will not increase property prices following the decline in commodity prices such as steel and cement and would pass on this benefit to its customers.

"Cement and steel prices have come down substantially over the past few weeks and we will definitely pass on the benefit to the buyers and as of now, we are not going to increase the prices of properties. But if commodity prices increase again, then we may need to re-look at our strategy," said Sarang Wadhawan, managing director, HDIL.

HDIL has a total developable area of about 196 million square feet (msf), out of which 70 msf is in the Mumbai Metropolitan Region (MMR), including the Mumbai International Airport Ltd (MIAL) project. HDIL’s ongoing projects account for around 64 msf while planned projects account for about 106 msf.
"The response to new residential launches in Mumbai has been very strong, particularly in case of all the three projects launched by HDIL. As about 87% of HDIL’s land reserves are located in MMR, it is well-placed to benefit from the strong revival in the Mumbai property market," said Motilal Oswal Securities Ltd, in a report.

During the quarter to end-September, HDIL made sales of about 1.5 msf from its ongoing residential projects in Kurla and Andheri and around 0.5 msf of its ongoing commercial project in Virar. The developer is trying to maintain the same percentage of sales in the third quarter (Q3 FY10) as it has reported in the first and second quarter.

Emkay Global Financial Services Ltd, in a report said, "We are revising our NAV estimate for HDIL from Rs333 to Rs375 by increasing the transferable development rights (TDR) price assumption from Rs1600 per sq ft to Rs2100 per sq ft. We believe HDIL has strong cash flow visibility due to revival in the TDR market and new launches lined up in the residential space."
- Pallabika Ganguly news@moneylife.in


Extended market trading hours: stock exchanges at loggerheads?

While the NSE has been pushing for extension in trading hours to combat the Singapore Stock Exchange’s time advantage, BSE may not lend support given the SGX influence

Capital market regulator Securities and Exchange Board of India (SEBI) has announced its intention of allowing the bourses to extend market trading hours. This move will see daily trading time increase to 8 hours from the current 5 and a half hours.

The National Stock Exchange (NSE) has supposedly been lobbying hard for this move, as it is concerned of losing business to the Singapore Stock Exchange (SGX), which enjoys better volumes on account of longer trading hours.

The Singapore International Monetary Exchange (SIMEX), now known as SGX, also operates an NSE-licensed derivatives product on the NSE's Nifty index, named SGX CNX Nifty. Its volumes are driven by foreign institutional investors (FIIs) who trade on the futures before the Indian markets open.

Foreign investors, constrained by the limited ability to participate directly in the Indian equities market after the ban on participatory notes, flock to the SGX Nifty futures product to catch some of the action in the Indian markets. Domestic investors in Singapore subsequently take positions on cues from these FIIs. SGX has somewhat stolen NSE’s thunder due to its impressive track record in derivatives and high ethical standards.

Interestingly, however, the SGX holds a 5% stake in the Bombay Stock Exchange (BSE), a smaller but bitter rival of NSE. This alliance in 2007 also posed a threat to Nifty’s domestic supremacy in the futures segment. Naturally, SGX’s stake in BSE raises a question mark on how much the BSE’s support to the proposed move would hinge on SGX’s influence on its thinking process. BSE officials were not immediately available to comment on Moneylife’s email, sent to seek their stance on the matter.

SEBI’s motive behind the extension is to bring the Indian markets in line with foreign markets, where trading takes place from 9am to 5pm. For the NSE, increasing trading hours on the bourse is crucial for sustaining its market-leader position and fighting off competition from a resilient BSE in the domestic market and an aggressive SGX in foreign markets. NSE’s profitability took a severe hit last year following the overall collapse in equity markets. Volumes suffered and revenues declined. Even BSE managed to put in a better performance, with revenues remaining flat. In this context, NSE may not want to forgo revenues from SGX’s licensed Nifty-based futures product by stopping this segment.
SEBI has yet to come up with any deadline for the exchanges to start trading with extended hours. The market regulator has put the onus on the bourses to put in place the infrastructure before migrating to the new trading timings. Given the plethora of consequences for all entities involved in the stock markets, SEBI may even rethink its call for extension in trading hours.

Sanket Dhanorkar news@moneylife.in


Sensex up by 153; Nifty gains 46 points

Despite huge volatility, the Sensex managed to end in positive territory

The Sensex gained 153 points from the previous day’s close, ending the day at 16,849 while the Nifty closed at 4,999; 46 points up on the back of strong industrial output data even as volatility ruled the day.

During the day, India’s biggest State-run oil exploration firm Oil & Natural Gas Corporation (ONGC) rose 3% on reports that the oil ministry has proposed a sharp hike in administered gas prices. Meanwhile, the government has allowed ONGC Videsh, the overseas arm of ONGC, to invest an additional Rs322 crore in an oilfield in Brazil. The approval of the Cabinet Committee on Economic Affairs (CCEA) will raise the total investment in the project to Rs1,762 crore.

Tata Steel was up 2% after the company said that it approved a new convertible bonds offer in exchange for an existing $875 million security to reduce costs and ease repayment obligations.

Shipping stocks rose after the Baltic Dry Index jumped 5.5% to 3,954 on Thursday, 12 November 2009 as China’s huge demand for iron ore and coal has intensified ship congestion outside key ports. Mercator Lines, Shipping Corporation of India, Essar Shipping Ports & Logistics, Shreyas Shipping & Logistics, Varun Shipping Company and Great Eastern Shipping Company rose by between 0.4% - 3.49%.

Shoppers Stop lost 4% after the company said its board will meet on Saturday, 14 November 2009, to consider raising funds through various means. JK Paper surged 4% on reports that the company plans to double its Orissa plant capacity to 2.5 lakh metric tonnes per annum at an investment of Rs1,500 crore.

Meanwhile, Asia’s key benchmark indices in Japan, South Korea and Taiwan fell by between 0.05%-0.35% while the key benchmark indices in Singapore, China and Hong Kong rose by between 0.04 %-0.7%.

During the day Fan Jianping, chief economist with the State Information Centre said China’s annual GDP growth rate could reach 10% in the fourth quarter as the economic recovery exceeds expectations, with full-year economic growth expected at about 8.3%. He added that next year’s economic growth would certainly exceed 8% but was unlikely to bring inflation risks, with the consumer price index possibly rising about 2.5%.

China’s central bank vice governor, Zhu Min said China is experiencing a V-shaped economic recovery, but it still faces tough challenges to restructure its economy in the process. He said China will place more emphasis on improving the quality and structure of the economy next year as growth becomes less of a worry.

France’s economy grew 0.3% in the September 2009 quarter. The growth was the same as in the June 2009 quarter, when France’s economy expanded for the first time after four quarters of contraction.

Germany’s September 2009 quarter gross domestic product rose a smaller-than-expected 0.7% compared with the previous quarter, the German Statistics Office reported.

The euro zone economy rose 0.4% quarter-on-quarter after five consecutive quarters of shrinking output, but was 4.1% lower year-on-year.

Meanwhile, on Thursday 13 November 2009, US markets ended in the red. The Dow Jones fell 94 points to 10,197 while the S&P 500 index was down 11 points, and the Nasdaq Composite was down 18 points.

US jobless claims fell for the second straight week. The latest initial jobless claims tally came in at a lower-than-expected 502,000, which is the lowest weekly total since January. Meanwhile, continuing claims came in at 5.63 million, which is the lowest level since March 2009. Mortgage rates declined last week, with the 30-year fixed rate down to 4.91% and home foreclosures slowed for a third consecutive month. In premarket trading, the Dow Jones was trading 11 points higher.
—Swapnil Suvarna news@moneylife.in


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