Selling pressure and weak global cues weighed heavily on Indian markets
Indian markets saw selling pressure throughout the day and investors also remained cautious about Greece’s fiscal position as they waited for interest rate decisions from two of Europe’s top central banks. At the end of the day, the Sensex declined 28 points from the previous day’s close to 16,972, while the Nifty closed at 5,080, down 8 points. We expect the Indian bourses to continue their uptrend. However, wait to buy at a dip.
Subex Ltd has announced the launch of Nikira V7.2, a fraud management component of the Revenue Operations Center (ROC). The stock ended flat.
Hinduja Foundries announced that the company’s unit at Hyderabad will have an additional weekly holiday on Thursday due to non-availability of power with immediate effect, till further notice. The stock plummeted 6%.
Suzlon Energy shot up 4% after the company won a major order from Gujarat State Petronet Ltd (GSPL) to set up, operate and maintain its 52.5-MW wind energy project in the Rajkot and Porbandar districts of the state.
Marg Ltd announced that, in continuation of the subsisting term sheet, Karaikal Port Pvt Ltd (KPPL), a wholly-owned subsidiary of the company, has on 1 March 2010, entered into a Shareholders’ Agreement and Share Subscription Agreement with India Infrastructure Fund for a proposed investment of Rs150 crore in KPPL. The stock was up 5%.
Strides Arcolab, as part of its strategy to focus on its core specialty injectable business, has entered into an understanding with Aspen to acquire a facility in Campos, Brazil with related products and IPs. The stock ended flat.
CESC Ltd’s subsidiary, Dhariwal Infrastructure, has issued a letter of intent to Punj Lloyd for an EPC project for a value of Rs1,023 crore in connection with its 2x300MW thermal power project undertaken at Tadali village, near Chandrapur in Maharashtra. The stock remained flat whereas Punj Lloyd plunged 2%.
During trading hours, the government released data that showed that the food price index rose 17.87% in the 12 months to 20 February 2010, faster than the annual rise of 17.58% in the previous week. The fuel price index was up 9.59%. The primary articles index rose 15%. As per market expectations, higher inflation is likely to add pressure on the central bank to raise interest rates in April 2010. However, finance minister Pranab Mukherjee said today that India’s economic recovery is still being driven by public spending and is not yet broad-based, further clouding the debate on the timing of rate hikes by the central bank.
During the day, Asia’s key benchmark indices in Hong Kong, South Korea, Singapore, China, Japan and Taiwan were down by between 0.26%-2.38%.
On Wednesday, 3 March 2010, the Dow Jones Industrial Average was down 9 points while the Nasdaq Composite and the S&P 500 remained flat.
The Beige Book survey of economic conditions released Wednesday by the Federal Reserve gave mixed signals about the prospects for the US economy. The economy again improved modestly in February, the survey said, but loan demand remained weak and there were no signs of improvement in the labour market.
As per reports, Greece announced further austerity measures designed at getting its fiscal deficit down to levels acceptable to the rest of the EU. Ongoing worries about Greek debt are expected to be one reason for the European Central Bank’s policymakers to keep rates on hold.
In premarket trading, the Dow was trading 4 points higher.
In an SMS to distributors, Birla Sun Life MF has asked IFAs to compare its new scheme with NRE deposits which fetch returns of 3.5%
Mutual funds (MFs) eye fondly lakhs of crores lying in savings accounts and term deposits of banks but have never found a way to get even a tiny fraction of this money. Birla Sun Life MF is making one more attempt with its capital protection scheme. It has recently sent a text message to some Independent Financial Advisors (IFAs) saying: "NRE Deposits earn 3.5% interest v/s Birla Sun Life Capital Protection offering deposits plus returns. This category is a very big target segment for this fund. Please speak to all your deposit holders as this product offers safety and returns which will attract every investor class."
The message was in connection with the fund house’s new fund offer (NFO), ‘Birla Sun Life Capital Protection Oriented Fund Series I’. The company has denied sending any such message on its part. According to trade sources and competitors, Birla Sun Life is targeting to mop up Rs600-Rs700 crore from this NFO.
The fund allocation is about 90% in bonds and 10% in equity. The fund aims to expand the investment by the end of 27 months. “It has a clear objective to protect capital because many people are hesitant to enter such products because their capital is at risk. It is difficult to commit a target for the NFO at this time,” said A Balasubramanian, chief executive, Birla Sun Life Mutual Fund.
“It is targeted towards fixed deposit investors who are keeping their money in fixed income where they earn 3%-4% interest,” said Mr Balasubramanian.
The fund is rated ‘AAA’ by Credit Rating Information Services of India Ltd (CRISIL). No TDS is applicable except for NRIs. The fund aims to further reduce tax liability by triple indexation method. The NFO closes on 10th March.
Developers from Mumbai have been issuing occupation certificates (OCs) instead of building completion certificates (BCCs). According to the new budgetary provisions, occupants who do not possess BCCs will have to pay a service tax of 10% throughout the life span of such properties
The service tax provisions in the Budget affecting the realty sector have sparked off a lot of debate in the industry. One of the obscure clauses stated in the service tax announcement is that occupants of developed properties have to possess a building completion certificate (BCC), failing which such properties would be considered as ‘properties under development’ and their occupants will have to pay a service tax of 10% throughout the life of the said property.
However, this provision can have major consequences for the Mumbai realty market. Under conditions of anonymity, a person familiar with the situation told Moneylife that around 90% of the structures in Mumbai do not posses a BCC. After the new clause in the Budget, the occupant will now have to possess a BCC.
According to industry sources, developers have been issuing occupation certificates (OCs) to buyers instead of BCCs. Developers find it easy to procure the OC rather than spend a huge amount to get a BCC from the authorities. The OC is issued when developers receive civic permission for water connections and sewage facilities. Many developers do not even try to procure BCCs, revealed other source.
In his Budget proposals, the finance minister had said: “In the ‘Construction of complex service’, it is being provided that unless the entire consideration for the property is paid after the completion of construction (i.e. after receipt of completion certificate from the competent authority), the activity of construction would be deemed to be a taxable service provided by the builder/promoter/developer to the prospective buyer and the service tax would be charged accordingly.”
This means a property would be deemed ‘under construction’ and would be a taxable service if there is no BCC issued by the concerned regulatory authority, which in most cases is the resident municipal authority (in Mumbai, this body is the Brihanmumbai Municipal Corp or BMC).
However, this new service tax clause may encourage more cash transactions in the realty industry, because developers will have to shell out greater amounts to procure a BCC.
According to a developer, there is no specific definition on what constitutes ‘completion’ of a property. Every state has a different definition of ‘completion’.
"Many builders find it difficult to comply with certain conditions (laid down by the designated civic authority), so they do not bother about the BCC once they procure the OC. The authorities issue the OC only when the property is fit for occupancy. Later nobody really bothers about the BCC," added other developer.
To top it all, a few developers are getting away without even procuring OCs, says a source from a leading bank.