The downward march continues

Fri, 29 Jan 11:30 am

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The Indian markets continued to lose traction during the previous two hours of trade on the back of persistent selling activity among the index heavyweights. Currently, intense selling pressure is being witnessed across all the sectors. Stocks from the metal, IT, telecom and consumer durables sectors are bearing the maximum brunt of profit booking.

The BSE-Sensex and NSE-Nifty are trading weak, down by around 191 points and 47 points respectively. This weakness is being witnessed in the mid and small stocks as well. The BSE-Midcap and the BSE-Smallcap indices are also trading lower , down by around 1.6% and 2.0% respectively. The Rupee is trading at 46.40 to the Dollar.

Real estate development major, DLF declared its 3QFY10 results yesterday.The company's topline grew by 48% YoY and 16% QoQ during the quarter on back of strong sales booking and low base effect. However the sales were down 39% YoY for the period 9mFY10. Its operating margins dropped to 42% during 3QFY10, from 57% in 3QFY09. This is on the back of higher overall expenditure primarily related to land acquisition and development rights.Net profits declined by 30% YoY during 3QFY10 due to higher tax rates and burgeoning interest cost. The total developable area stood at 430 msqft at the end of the quarter as compared to 423 msqft at the end of the preceding quarter.

It may be noted that DLF's management plans to focus on the mid-income housing segment on a pan-India basis and has forthcoming launches at attractive price points in Chennai and Kochi. It also has been working consistently on reducing its debt burden by selling its non-core assets. The company divested and realized approximately Rs 1.7 bn during the quarter through sale of some of its non-core assets and plans to garner about Rs12.5 bn by the end of last quarter. We believe that with the commencement of construction for SBM and other projects, cash flow visibility over the next few quarters will improve.

According to a leading business daily, Indian Steel major Tata Steel has formed a joint venture (JV) with Japan's largest steel producer, Nippon Steel Corporation (NSC). This JV in which Tata Steel will hold 51% stake will produce and sell automotive cold-rolled flat products in India. As an aim to tap the growing demand for high-grade automotive steel, the JV will set up continuous annealing and processing line (CAPL) with a capacity of 6,00,000 tonnes at Jamshedpur. The Japanese partner will transfer its technology for producing automotive high-grade steel. The JV is expected to be concluded by June 2010 and start operations before March 2013. We believe that this JV will aid the company is better addressing the local needs of the Indian automotive industry and reinforcing future growth for itself as well as Indian auto sector.