Positive growth figures from the infrastructure sector boosted market sentiment
The Sensex was up 130 points from the previous day’s close, ending the day at 17,361, while the Nifty closed at 5,178, up 34 points.
Markets will remain closed for four days in a row from Friday (25 December 2009) to Monday (28 December 2009) on account of Christmas and Moharram.
India’s infrastructure sector grew an annual 5.3% in November 2009, said trade minister Anand Sharma. Infrastructure sector output grew 3.5% in October 2009 from a year earlier. The sector accounts for 26.7% of the country's industrial output.
Food price index rose 18.65% in the 12 months to 12 December 2009, data released by the government showed. The primary article index jumped 14.66% and the fuel price index rose 3.95%. The worst monsoon in nearly four decades and flooding in some parts of the country have pushed up food prices.
During the day, the Cabinet Committee on Economic Affairs (CCEA) has approved extending ITI’s 30% quota in BSNL & MTNL orders. The stock shot up 11% after the government said that the telecom department was preparing a revival package for ITI, and it would get 70% advance payment for BSNL & MTNL orders.
Hanung Toys & Textiles has signed an export order tie-up with a leading US buyer, for exporting home furnishing to the extent of $60 million. The stock shot up 5%.
Escorts zoomed 4% after the company said that one of its promoter group companies revoked a small portion of shares which it had pledged earlier.
Radico Khaitan jumped 4% on reports that a joint venture of the company with Diageo had received the Foreign Investment Promotion Board’s nod for 100% foreign direct investment.
Jet Airways rose 2% on reports that the Cabinet panel had approved the airline’s plan for a $400-million QIP.
Rolta India remained flat after the company said that it had bought back foreign currency convertible bonds aggregating $15 million.
Bharti Airtel fell 2% after Citibank reportedly sold its stake in Bharti Infratel, the telecom tower arm of Bharti Airtel, to JP Morgan, exiting without any gain from the $50-million investment it made over two years ago.
Reliance Communications is reportedly seeking to bolster its wireless and enterprise business with an investment of more than Rs6,300 crore under a plan branded as ‘Edge 2010’. The stock remained flat.
During the day, Asia’s key benchmark indices in Hong Kong, China, Japan, South Korea and Taiwan were up between 0.79%-2.59%.
As per media reports, Bank of Japan (BoJ) governor Masaaki Shirakawa said that the central bank would act promptly and decisively if financial markets destabilise. He also repeated that weak final demand was the root cause of deflation, and that the BoJ would maintain its easy monetary policy to beat sustained price falls.
According to data released by the ministry of economic affairs (MOEA), Taiwan’s industrial production index for November rose 31.46% year-on-year, growing for the third consecutive month. The industrial production index stood at 108.78 in November, representing the highest year-on-year growth since August 1978, an increase that the MOEA attributed to the low base last year and the recovery of the global economy.
Meanwhile, a Chinese news agency quoted commerce minister Chen Deming as saying that China’s retail sales would grow more than 15% in 2009, the latest sign that the economy is on a brisk recovery path.
According to the minutes of the Monetary Policy Committee’s 9 December-10 December 2009 meeting released on Wednesday, members of the Bank of England’s committee unanimously backed the decision earlier this month to maintain the size of the bank’s asset-purchase plan at £200 billion ($318.70 billion). The panel also unanimously backed the decision to keep its key lending rate at a historic low of 0.5%.
On Wednesday, 23 December 2009, the Dow Jones Industrial Average rose 2 points while the S&P 500 and the Nasdaq Composite added 3 points and 17 points respectively.
As per US reports, new home sales tumbled 11.3% in November 2009, raising the spectre that previous positive signs in the industry were the result of the government stimulus and were not sustainable.
Meanwhile, the US department of treasury on Wednesday said that it has received repayments on its Troubled Asset Relief Program (TARP) investments in Wells Fargo and Citigroup to the extent of $45 billion, bringing the total amount of repaid TARP funds to $164 billion. The US treasury now estimates that total bank repayments should exceed $175 billion by the end of 2010, cutting total taxpayer exposure to the banks by three-quarters.
In premarket trading, the Dow was up by 30 points.
The BSE Brokers Forum, which does not see any benefit to any market participant, stakeholder, institution or retail investor due to the move to advance market opening to 9am, plans to take up the issue with the prime minister
Brokers from the Bombay Stock Exchange (BSE) plan to take up the issue of extending trading hours with the prime minister, and the market regulator Securities and Exchange Board of India (SEBI).
The BSE Brokers Forum, which has a membership of over 550 brokers, has opposed the decision of advancing trading hours to 9am. The Forum is planning to submit its representation to the prime minister's office, the ministry of finance, SEBI, investor associations and other trade associations, it said in a release.
"The idea of doing this is just to keep them (government and regulator) informed about the worries of the brokers (if the decision to extend the market hours materialises)," BSE Brokers Forum chairman Bhanubhai Fozdar told PTI.
Early this week, the Forum had demanded that both the BSE and the National Stock Exchange (NSE) reconsider their decisions to commence trading from 9am, citing practical problems that could arise on account of early opening of these bourses.
The Forum would also meet the chiefs of both the bourses in a bid to convince them that the move has no clear benefit for market participants and retail investors.
Intense rivalry between the two leading bourses prompted both of them to advance their market opening to 9am from 4th January.
The Forum, citing a November survey of brokers, said that nearly 80% of the trading members of the BSE are against extension of trading hours.
"A national debate on these issues is necessary. This is a change which merits lot more thought and sensitivity than what has been given," the Forum said.
The Urban Land Ceiling Act was repealed in November 2007. However, real-estate developers are still fighting cases related to this repealed legislation in the Bombay High Court
The repealed Urban Land Ceiling (ULC) Act has held up more than 100 projects across Maharashtra. The Maharashtra government came up with the ULC Act in 1976 to impose a ceiling limit on vacant land in urban areas. The Act was repealed in November 2007. However, the Bombay High Court is still hearing cases related to this repealed Act—on a daily basis.
You can’t but wonder about the sheer irony of the situation, when a law does not exist any more, but hearings on cases under a repealed Act are being conducted everyday.
According to industry sources, such cases against various developers are being struck down by the Bombay High Court, because the Maharashtra government had placed the names of the properties of various developers in its revenue record, so that it can show that it has a claim on these properties. This move by the government, say sources, was carried out after the repeal of the ULC Act.
Various developers claim that the government had simply acquired their properties by placing them under the revenue record. This was done without giving due notice to various developers. In a few cases, claim developers, the properties were not even physically acquired by the government, but they were simply placed under the revenue record.
Neptune Group has recently won four cases which were stuck under the repealed ULC Act. “We are happy that we have won the case filed under the ULC Act related to our Swarajya Ambivali project. We knew that we would win it, as the government had wrongfully placed these properties under their revenue record,” said Sachin Deshmukh, director, Neptune Group.
“It takes a minimum of four years to physically transfer a property between two parties. But the government finished the procedure of acquisition in two months after the law was repealed. Everyday, developers are winning cases (against the government). This is because the government either did not follow the full procedure of physical acquisition, nor did the developer receive a notice from the government,” said Rajesh Shukla, legal adviser, Neptune Group.
“Our projects were put under the ULC Act in February 2008 after the law was repealed in November 2007. In a number of such cases, the High Court has passed judgement in favour of the developer,” added Mr Shukla.
Godrej Properties Ltd and K Raheja Universal are also fighting similar cases in the Bombay High Court.
Whenever these cases come up in the Bombay High Court for hearing, the court refers to the Voltas Switchgear Ltd case. The company had about 27,000 sq metres of land in Thane which was stuck up under the ULC Act for almost two years. The company filed a case way back in 2006 against the acquisition of its land, and it subsequently won the case on 25 July 2008, as the court decreed that the land was not physically acquired by the government.
“We also have a few cases in the Bombay High Court, but we know we will win it as the government has not physically acquired our land. We are also thinking of developing a township on these lands,” said Mofatraj P Munot, chairman & founder-promoter, Kalpataru Group.
“In Thane, five to six projects on Ghodbunder Road are stuck up under this (repealed) law. The developers whose lands are stuck up in such cases, and who have (ownership of) 100 acres, are converting their land into townships. The UCL Act does not apply to townships anyway,” said Pankaj Kapoor, founder, Liases Foras.
Ergo, developers in possession of land above 100 acres are converting them into townships to stay on the right side of the law. In Pune, four such townships have come up. Hiranandani Constructions is coming up with a similar township in Panvel.
“If you have more than 100 acres of land, the ULC Act does not apply. But if you had been served a notice by the government for acquisition of your land (below 100 acres) before the ULC Act was repealed, you will have to go through the complete legal procedure to free your land from the government’s clutch,” said Omar Vanjara, associate partner, Solomon & Co, advocates and solicitors.