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Share prices to see some more correction: Tuesday closing report

Lower lows on Nifty may lead it level of 5,290

US indices mostly ended in negative on Monday on the concerns that Greece may be unable to avoid the default as it struggles to reach terms on a new bailout package. Asian markets had a weak opening with the Greece's political leaders pushing back their decision for another day on Monday. Back home the indices opened well in the positive. As we mentioned in our closing report of the last two days that a correction is round the corner if the indices are not able to maintain itself above the day’s close. The market reacted today and Nifty may now be seen reaching the level of 5,290 in case if it makes a lower low. The National Stock Exchange saw a volume of 89.91 crore shares. The advance-decline ratio on the NSE was 1217:481.

The Sensex and the Nifty opened at 17,814 and 5,413 respectively. In the morning session itself the indices hit their intra-day highs at 17,832 and 5,413. This was the highest intra day high for Nifty since 4 August 2011. However, after the opening of the European market, the indices lost their strength to hit their intra-day low, lower low as compared to yesterday, at 17,582 and 5,323. The Sensex closed at 17,622, 85 points down (0.48%) while Nifty closed at 5,335, 27 points down (0.49%).

The Asian market closing was a mixed performance. KLSE Composite, NZSE 50, Straits Times, Seoul Composite, Taiwan Weighted ended in positive while Shanghai Composite, Hang Seng, Jakarta Composite, Nikkei 225 ended in red. European indices trading with a hope that a resolution could be found to enable a second bailout deal for Greece. The US futures were trading in red.

The Indian economy is estimated to grow 6.9% in the current fiscal year through March 2012 (FY 2012), sharply slower than the 8.4% expansion reported last year, according to a forecast given by Central Statistical Office today. The new expectation is due to weaker growth in manufacturing and farm output, data from the ministry of statistics and implementation showed. The government expects manufacturing output to grow 3.9% this fiscal year compared with a 7.6% increase a year earlier. Farm output is expected to rise 2.5%, compared with 7% last year. In December 2011, the government had cut its growth projection for FY 2012 to between 7.25% and 7.75% from an initial forecast of 9%.

Among the broader indices, the BSE Mid-cap index fell 0.81% and the BSE Small-cap index fell 0.44%. Nine out of 13 sectoral indices ended in negative. BSE Capital goods index fell 2.29%, followed BSE Realty (fell 2.10%), BSE Power (fell 1.98%), BSE Metal (fell 1.77%), BSE TECk (fell 1.21%). The four indices which ended in positive were BSE Oil & Gas, BSE Consumer durable, BSE Bankex, BSE FMCG had a flat positive ending
 
Out of Sensex 30 stocks, 8 ended in positive while 22 ended in negative.  The top five gainers were RIL (1.44%), ITC (1.38%), ONGC (1.25%), ICICI Bank (0.98%), TCS (rose 0.63%). Bottom five losers were BHEL (4.22%), Tata Steel (3.30%), Mahindra & Mahindra (2.88%), GAIL (2.70%) and DLF (2.66%)

Among the big losers was Manappuram Finance which said that its board will meet on February 10 to discuss a Reserve Bank of India (RBI) notice that prohibited it from accepting or renewing deposits from the public. They will also discuss measures to improve its corporate governance at the meeting. Acceptance of deposits by Manappuram Finance or by Manappuram Agro Farms is punishable with imprisonment, the RBI said in a notice. The lender clarified on Tuesday it did not accept any public deposits but was accepting investments through secured non-convertible debentures and subordinate bonds which do not fall under "public deposits”. The stock fell 19.96% to close at Rs45.50 on the BSE

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Retail boom hampered by real estate crunch

More retailers opting for standalone formats due to shortage of quality properties

A recent report on the state of retail realty by Jones Lang LaSalle says that though the retail industry is poised for a boom, shortage of quality properties may curtail its chances. So now, retailers are looking for stand alone properties.

“The last few months have seen a lot of mid-sized office and mixed-use buildings in Mumbai going under the hammer. What is so unusual about these buildings is the fact that they are going to be redeveloped into stand-alone retail formats,” said Ashutosh Limaye, head - research and real estate intelligence service.

According to Jones Lang LaSalle, 2011 saw a retail real estate supply of 13.8 million square feet hit the market, with 10.7 million square feet getting absorbed. But there is a catch. “All worthy properties are fully consumed and good properties on hand being leased within the blink of an eye. Delaying decisions by even a few days means diminished hopes of business expansion. There is simply not enough good retail space to sell their wares. It can well be imagined what the scenario will be when FDI into multi-brand retail opens up,” Mr Limaye said.

Retailers, he says, have realised that most malls have turned out to be unprofitable. The rush for constructing malls has resulted in a number of unviable projects; many of them concentrated in a select pocket; and looking like a replica of the next. “So, we have quite a few mediocre shopping centres with substandard locations in inappropriate catchments, designed experimentally and sold by strata (strata-selling mall space is like issuing a death warrant to the mall). These are ruins of hastily-commissioned projects where no retailers want to come, thus adding to the pile-up of vacant retail space in our cities. To compound this problem, there are very few new launches that can lure retailers on project merit,” Mr Limaye says.

Big retailers are now eyeing old mansions, mixed-use buildings and small office blocks in established and emerging locations. “Properties which, with retrofitting, can enable retailers to start selling in no time at all are fast becoming precious assets for big retail companies. Even constructing glass cubes on plots that house the 'building next door' is seen as preferable over having to wait for properly located and configured malls to come along,” he said.

It may also be profitable to realtors to sell away individual properties, because it is difficult to find buyers in the present scenario. “Commercial and retail sectors are seeing many distress sales~ especially by small builders,” said a builder, “because of the global economic situation, many pre-commissioned properties are now without takers. In recent times, because of strong dollar price, some NRI investments have come, but mostly for residential property; and is not of much significance.”

The retail sector is currently under a lot of pressure. Many are having trouble managing staff and operation costs, and have incurred substantial debt, especially in the lifestyle and apparel sector. Future Group’s Pantaloons has a debt of Rs 2273.12 crores, while the much troubled Koutons has Rs 806.81 crores. In the last one year, Kouton’s stock price has fallen by 70% and was trading at an abysmal Rs16.55 on 6th February. Brandhouse Retail, which is the home of Reid&Taylor, Carmichael House and Belmonte, was trading on Rs13.84 on 6th February, which is a 56% fall over one year.

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