Sensex sheds 220 points, closes at 16,877

Indian markets faltered on fears of the apex bank moving towards a tighter monetary policy

The Sensex closed at 16,877, down 220 points from the previous day’s close, while the Nifty ended the day at 5,033, down 73 points, on fears of monetary tightening by the central bank.

Reliance Industries Limited (RIL) was down over 1%, on reports that RIL was looking to surrender five-six blocks in KG D6 due to its failure to strike oil or gas in this well. This move will take RIL’s total number of surrendered blocks to 19-20.

Gammon India declined 2%, after the company’s overseas unit SAE Powerlines, Italy, secured a 220-kilovolt transmission line turnkey contract aggregating $22.50 million in Algeria.

Royal Orchid Hotels declined 1% after the company established and commenced operations of its new four-star hotel, Royal Orchid Central.

City Union Bank has entered into an agreement with Geojit BNP Paribas Financial Services, Cochin, to provide online trading in equities, derivatives, IPOs and mutual funds to its customers. The stock was down 2%.

Many Indian firms have reportedly paid higher advance tax in the third instalment. As per media reports, Tata Motors has paid Rs100 crore in the third quarter against zero payment in the same period last year. Mahindra & Mahindra paid Rs195 crore against Rs4.50 crore. Tata Steel paid Rs650 crore against Rs260 crore. Hindalco Industries paid Rs100 crore against Rs40 crore.

Hindustan Unilever paid Rs200 crore against Rs155 crore, Larsen & Toubro paid Rs270 crore against Rs210 crore, Grasim Industries paid third quarter advance tax at Rs150 crore against Rs75 crore, UltraTech Cement paid Rs90 crore against Rs65 crore, HDFC’s third quarter advance tax was at Rs320 crore against Rs280 crore last year.

Meanwhile, Bajaj Auto paid Rs320 crore against Rs105 crore over the same year-ago period whereas Reliance Industries paid Rs850 crore, against Rs450 crore in the year-ago period. Tata Consultancy Services' third quarter advance tax was at Rs177 crore against Rs129 crore. ACC’s third quarter advance tax was at Rs110 crore against Rs 125 crore. HDFC Bank’s September quarter advance tax jumped to Rs400 crore from Rs300 crore. State Bank of India paid advance tax worth Rs1,795 crore against Rs1,700 crore. ICICI Bank’s Q3 advance tax fell to Rs301 crore against Rs625 crore.

Advance tax is paid in four instalments in June, September, December and March, and is based on taxpayers' projected income, giving an indication of industry’s performance in coming months.

During the day, Moody’s Investors Services raised its outlook on rupee rating to ‘positive’ from ‘stable’, citing the country’s strong external position and resilience to the global credit crisis. Moody’s current local currency rating for the country is ‘Ba2’, two notches below investment grade. It said that the change in the outlook on the local currency government bond rating was prompted by increasing evidence that the Indian economy has demonstrated its resilience to the global crisis and is expected to resume a high growth path with its underlying credit metrics relatively intact. It also raised the ceiling on Indian banks' foreign currency deposits to ‘Ba1’ from ‘Ba2’ to better reflect the robust external position of the country. It said that the latest rating action does not affect its outlook on the government's foreign currency bond ratings, which remain ‘stable’ at ‘Baa3’.

The government’s total spending will remain at Rs10,20,000 crore ($218 billion) for the fiscal year to March 2010, same as the budget estimate made in July 2009, said finance minister Pranab Mukherjee. Mr Mukherjee also said that the federal fiscal deficit in 2009-10 would remain within the targeted 6.8% of gross domestic product.

The Manila-based Asian Development Bank (ADB) hiked growth forecasts for developing economies in Asia, just three months after its previous forecast, but warned against any hasty withdrawal of stimulus packages. The multilateral bank said that regional economies should grow 4.5% on an average in 2009 and 6.6% in 2010. In September 2009, the bank had forecast 2009 growth at 3.9% and 2010 expansion at 6.4%. However, the ADB warned that care must be taken in withdrawing economic stimulus packages. It also said that risks to Asia’s expansion included a short-lived recovery in developed economies and destabilising capital flows.

During the day, Asia’s key benchmark indices in China, Hong Kong, Japan and Indonesia fell by between 0.22%-1.23% on speculation that China's government will take more steps to curb property speculation, while the indices in Singapore and South Korea rose by between 0.06%-0.17%.
On Tuesday, 14 December 2009, the Dow Jones Industrial Average rose 30 points while the S&P 500 and the Nasdaq Composite were up 8 points and 22 points respectively.

In premarket trading, the Dow was trading 27 points lower.

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    Cleaning up or Cleaning out

    SEBI has banned entry loads for mutual funds. The outcome has been catastrophic; more earnings for big banks and less service for retail investors. Analysis by Sucheta Dalal & Debashis Basu

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  • ICICI Venture Fund looking to list yield-generating assets

    The venture fund is trying to create a good yield-generating portfolio of properties and plans to subsequently list them in the stock market

    ICICI Venture Fund Management Company Ltd is trying to create a portfolio of yield-generating assets by repositioning old renowned building or adding new properties. It is also considering the possibility of listing these assets in the stock market. The venture fund kick-started this idea two years back by repositioning Express Towers at Nariman Point, Mumbai.

    “It is a two-year old plan when we thought to reposition Express Towers. That was a boom time in the real-estate market and our goal was to create a portfolio of such good quality, yield-generating assets. We were also thinking to list these assets in the stock market. But after that the market scenario changed, it was difficult to do any kind of listing. As and when the market recovers, we will again start looking at it (the possibility of listing),” said Sanjeev Dasgupta, president for real estate, ICICI Venture Fund.

    Express Towers is jointly owned by the Indian Express Group and IAF III (a fund managed by ICICI Venture). IAF III, which holds 49% stake in the group, is providing advisory services for the repositioning of Express Towers.

    “We are looking at adding features such as coffee shops and a fitness centre which will give the building a much more younger and vibrant atmosphere. This will also help us to create a more tenant-friendly atmosphere. Over the past twelve months, we have redone the lobby and installed high-speed lifts,” said Mr Dasgupta.

    Express Towers was built in 1970 and was designed and constructed by Joseph Allen Stein. Some of Mr Stein’s other landmark projects include the Ford Foundation Headquarters, the India Habitat Centre, the India International Centre and the Sher-i-Kashmir Conference Centre.

    The Fund is in talks with some international coffee retail chain brands, but has not yet decided on its final choice. For its proposed fitness centre, it has yet to decide between tying up with a branded group or buying equipment and setting up the centre on its own.

    “We will be using the lobby space (at Express Towers) for including these features,” said Mr Dasgupta.

    The company believes that listing of such assets will help it get good returns from the stock market. It is also scouting for similar investments in the real-estate market to expand its portfolio, after the sector shows some signs of stabilising. “We are not in a hurry to buy. We will wait and watch for the next six months before taking any step,” said Mr Dasgupta.

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