Gammon India March qarter net profit at Rs 72.63 cr

Construction company Gammon India on Friday said its net profit for the quarter ended March 31, 2009 stood at Rs 72.63, while it had a net profit of Rs 21.29 crore in the same quarter ended March 2008.The financial statements include the amalgamation of the company with the erstwhile Associated Transrail Structures Ltd (ATSL). Hence, the figures for the current year and the last quarter ended March 31, 2009 are not comparable with those of the previous year, Gammon India said in a filing to the Bombay Stock Exchange (BSE).

Net sales rose to Rs 1,905.84 crore for the quarter ended March 2009, against Rs 821.61 crore in same period last year.For the year ended March 31, 2009, the company has posted a net profit of Rs 140.47 crore, however it had a net profit of Rs 86.15 crore in the same period previous year.Further, the board of directors has approved to allot 1.60 crore convertible warrants to three promoters of the company on preferential basis.

The company has alloted 30 lakh convertible warrants to Pacific Energy, 65 lakh convertible warrants to First Asian Capital Resources and 65 lakh convertible warrants to Devyani Estate & Properties, the BSE filing added.The warrants are convertible for cash at a price of Rs 90.20 per share, the filing said.

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Markets trade record volumes of Rs 157,891 crore

After a “forced holiday” yesterday due to two circuit breakers, traders rushed back to the market today. The result: Record combined volumes in the market.Markets reported their highest turnover of 157,891 crore. In the cash segment, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) recorded turnovers of Rs 40, 122 crore and Rs 11,781 crore, respectively.

In the futures and options (F&O) segment, the NSE recorded the highest-ever turnover of Rs 105,986 crore.The previous highest turnover was Rs 149,505 crore on October 17, 2007. This was reached immediately after the then Securities and Exchange Board of India Chairman M Damodaran issued guidelines for phasing out participatory notes (P-notes).

The BSE Sensitive Index, or Sensex, opened at 14, 757.82 points, but slipped immediately. In the afternoon session, there was a sharp movement and the index hit the day’s high of 14.930.54.

Market participants said there was initial buying from traders and institutional investors who had to do short covering because of margin calls after yesterday’s sharp spurt in share prices.In the afternoon, institutional players, especially insurance companies, stepped in to do some profit booking. This led to a sharp fall.

The Sensex closed flat at 14,302.03, up 17.82 points, or 0.12 per cent. The CNX Nifty closed down marginally at 4.70 points, or 0.11 per cent, at 4,407.82. “Short covering and buying by FIIs propelled the markets in the afternoon. The markets remained flat as most retail investors were booking profits with every rise,” said V K Sharma, head (research), Anagram Stock Broking.

According to provisional data from the BSE, FIIs bought shares worth Rs 4,792 crore. Domestic institutional investors sold shares worth Rs 1,964 crore. The US market rallied yesterday on better-than-expected results from home improvement retailer Lowe’s which reinforced hopes that the recession is easing. The Dow Jones closed up by 2.9 per cent. S&P and Nasdaq closed higher by 3 and 3.1 per cent, respectively.

The Asian market responded well to the global cues. The Hang Seng and Nikkei rallied 3 per cent. The Strait Times surged 4 per cent.In India, the realty index rose 12.80 per cent. That means that in the last two days, the realty index has risen a whopping 36.25 per cent. Both Bankex and consumer durables index were up 6 per cent.

However, the information technology index lost 10.10 per cent because of the rupee appreciation. A strong rupee will adversely impact the IT companies’ rupee revenue. Most IT companies have already hedged their dollar receivables.DLF rose 19.5 per cent today. It has risen 45.40 per cent in the last two days.

Reliance Communications and SBI rose 12.9 per cent and 12.7 per cent, respectively.“Considering the first two days of trading, the sentiment in Indian markets looks decoupled from the global markets. So, amid volatility, markets will be driven by domestic sentiments.

Going forward, FIIs will increase their investments as compared with what they have done so far on an average basis,” said Anil Ladha, head (capital markets), ICICI Securities.

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Sensex creates history; two upper circuits in one day

Markets have stopped trading for the day as the benchmarks hit another upper circuit Monday as soon as the trade resumed after 2 hour break. Investors are euphoric after the United Progressive Alliance emerged victorious in the 2009 general elections.

Bombay Stock Exchange’s Sensex was locked at 14272.62 up 2099.21 points or 17.24 per cent. National Stock Exchange’s Nifty was locked at 4308.05, up 636.40 points or 17.33 per cent. According to media reports turnover including cash and F&O was less than Rs 1000 crore. Marketmen are upbeat given the fact that there will be no interference by the Left Parties and other regional parties in day-to-day functioning of the government and less number of allies will lead to a stable government which will run its course of five years.

The new government which is likely to be sworn in by Friday is expected to come-out with full budget within 45 days of resuming office, according to media reports. Reforms in the banking sector, divestment of public sector undertakings, infrastructure, retail sector and insurance sector is likely to top the priority list. Sensex had opened 10.73 per cent or 1305.97 points higher at 13479.39 points to 12011.10. National Stock Exchange’s Nifty was locked at 4203.30, higher by 14.48 per cent or 531.65 points.

Market experts views:

• “Markets had previously worried that gains by leftist and smaller regional parties would weigh on the reform agenda and lead to a further blow-out in the already large fiscal deficit.
• In previous elections, both BJP- and Congress-led alliances had been unable to push through reforms, held down by allies with their own agendas.
• The government's rural jobs program and strong private sector investment have highlighted the positive effects of economic reform and liberalisation, and voters' shunning of smaller parties imply a desire for greater action on the reform front,” said a Moody’s Economy.com report. The report added, “Despite the strong endorsement from voters, the government is likely to have a tough job pushing through some much-needed reforms.
• Political constraints mean a scrapping of fuel subsidies are unlikely, nor reforms to outdated labour laws that constrain hiring and create high firing costs.
• Returning to the path of fiscal consolidation will also be challenging if the global recession becomes protracted, while the financial crisis will mean any steps to liberalise capital flows and foreign investment will be cautious.” Madhabi Puri Buch, MD & CEO, ICICI Securities said, “The mood of the moment is clearly upbeat.
• The largest and most complex election process on the planet is complete.
• The impact of the results on the markets is clearly positive - both in the short term and long term.
• In the secondary markets and the primary markets.”
• “It is almost as though investors had pressed the pause button on major decisions on account of uncertainty.
• With the clear mandate to the new government and the strong expectation of stability for the next five years, the play button will be on. If global cues continue to be positive, the play could even become a fast forward,” Buch added.
• Dinesh Thakkar, CMD, Angel Broking said, “The election results have come as a positive surprise and are expected to go down well with the markets considering that markets like continuity of government policies, mindsets and ideologies.
• The UPA’s 250+ tally has managed to beat the most optimistic political analyst on the street and this ‘thumping’ victory has set the stage for the Congress led UPA to come back to power.
• Further, the possibility that the UPA could form the government without the Left will further soothe investors’ nerves.
• The markets are expected to rally as fresh money from FIIs and those waiting on the sidelines on account of the political uncertainty, makes its way into Indian stockmarkets.
• Investors must remain ‘long’ on India to take advantage of the long-term wealth creation opportunities that Indian stockmarkets have to offer.”

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IEA Cuts Oil-Demand Outlook as Recession Lingers

The International Energy Agency cut its oil-demand forecast for a ninth consecutive month, predicting consumption this year will fall the most since 1981 as the recession lingers. The Paris-based adviser to 28 nations cut its global oil demand estimate “slightly” to 83.2 million barrels a day this year, down 3 percent from 2008, it said today in its monthly report. That is 230,000 barrels a day lower than it forecast last month.

The revision comes a day after OPEC reduced its 2009 forecast, predicting oil demand of 84.03 million barrels a day. “Demand continues to look very, very weak,” David Fyfe, head of the IEA’s oil industry and markets division, said in a phone interview from Paris. “Although there has been a lot of talk about the green shoots of economic recovery, we think it is still a little bit early to be flagging any start of a full blown recovery.”

Oil prices have climbed 34 percent this year, trading above $60 in New York this week for the first time in six months on increasing optimism about an economic recovery and record production cuts by the Organization of Petroleum Exporting Countries.

Still, U.S. crude stockpiles remain near the highest since 1990 as the recession saps fuel demand. OPEC crude production is beginning to rise as higher prices encourage members to pump more than their quotas.

• ‘Very Weak’

Demand is weakest in the world’s most developed nations, where consumption will drop by 5.1 percent this year, the IEA said. The IEA cited “very weak” demand data in April for the U.S., and to a lesser extent, Europe. Crude inventories in the industrial economies of the Organization for Economic Cooperation and Development are at their highest since 1993, according to Fyfe.

Stockpiles were equivalent to 62 days of consumption as of the first quarter of the year, according to the IEA. Iran’s OPEC governor Mohammad Ali Khatibi earlier this week said stock levels representing 52 days of consumption were a “healthy level.” “The forward demand-cover level is very high,” Fyfe said. “The market structure is still supportive of a degree of stock- building. It is to do with oil for which there is scant demand at the moment.”

• ‘Sustained Weakness’

The energy adviser said it expects consumption in developing economies to contract for the first time since 1994 as China and Russia “continue to exhibit sustained weakness.” Demand in these economies will average 38.1 million barrels a day this year, a decline of 0.4 percent, or 140,000 barrels a day compared with 2008.

The IEA demand estimate is based on a forecast that global GDP will shrink 1.4 percent in 2009 and the world economy won’t start to markedly recover until 2010 at the earliest, it said. Should the world economy see “strong” economic recovery this year, the IEA’s oil demand could be “too pessimistic,” according to the group. “If we get an economic bounce in the second half of the year, demand could be stronger than we are showing,” Fyfe said.

Non-OPEC supply will fall by 300,000 barrels a day this year, a second annual decline, to about 50.3 barrels a day. The IEA increased its forecast 50,000 barrels a day compared with last month because of “stable” supply from the North Sea and higher-than-expected Russian output. Supply from OPEC rose for the first time in eight months in April as members backtracked on production cuts, according to the IEA.

• Review Production

OPEC will meet May 28 in Vienna to review production quotas. It agreed in March to keep supply unchanged as members continue to implement reductions agreed last year, totaling 4.2 million barrels a day, to stem plunging prices. The 11 OPEC nations bound by production quotas pumped 25.8 million barrels of crude oil a day last month, the IEA said, compared with their official Jan. 1 limit of 24.845 million a day.

That means the group collectively completed 78 percent of its promised reduction, compared with 83 percent in March, the IEA said. The IEA’s estimate is in line with OPEC’s own figure. The producer group said yesterday the 11 members implemented 77 percent of planned output cuts in April, down from 82 percent for March. Production rose to 25.8 million barrels a day, the group said, citing secondary sources.

• Compliance

“There is a little bit of leakage vis-à-vis targets from Iran and a little bit from Angola,” said Fyfe. “Analysts are saying that with prices moving higher and cohesion fraying at the edges, it might be harder” for the group to reduce production again. As global consumption weakens, OPEC needs to provide less oil to balance supply and demand.

All 12 OPEC members, including Iraq, will need to supply about 27.9 million barrels of crude a day this year, the IEA report showed. That’s a reduction of 300,000 barrels a day from last month’s assessment.

Those same 12 OPEC members pumped 28.2 million barrels a day in April, 270,000 barrels a day more than the previous month, according to the IEA. Crude output in Saudi Arabia, OPEC’s biggest producer, was 7.95 million barrels a day in April, unchanged from March, the IEA said.

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DLF to hive off wind power business

The country's largest real estate developer, DLF, today said it will hive off wind power business, one of its non-core businesses, to a wholly-owned subsidiary."The board of directors of the company at its meeting held on April 30, 2009, inter alia, has approved to transfer company's wind power business, as a going concern on slump basis, to a wholly-owned subsidiary," DLF said in a filing to the Bombay Stock Exchange.

DLF would seek shareholders' nod for the same, it added. While declaring its financial results, regarding exiting from non-core assets, DLF yesterday said: "Wind Power has met with a good response from strategic partners wherein the due diligence of the assets is currently underway.

"Besides, the company was contemplating making an exit from long gestation projects such as hotels. It had already withdrew from large township projects at Bidadi and Dankuni.DLF reported 93 per cent plunge in consolidated net profit for the fourth quarter of 2008-09 at Rs 159.05 crore.

Its profit stood at Rs 2,176.82 crore in the year-ago period.For the whole of 2008-09, DLF's net profit decreased by 41 per cent at Rs 4,629 crore compared with Rs 7,812 crore in the previous fiscal.

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