Taking cues from peers across Asia, the Indian indices started close to the dotted line and nosedived into the negative territory today. Backed by selling pressure in realty, IT, commodity and FMCG stocks, the benchmark indices in the Indian stock market languished in the red for rest of the session. Lower food inflation numbers too failed to enthuse investors. While the BSE-Sensex closed lower by around 371 points (down 2%), the NSE-Nifty closed lower by around 112 points (down 2%). The BSE-Midcap and BSE-Small cap were not spared either and lost 2% and 3% respectively.
As regards global markets, India topped the losers in Asia while other major Asian indices also closed lower. The European indices have opened in the red. The rupee was trading at Rs 45.68 to the dollar at the time of writing.
With today's decline, the Sensex is now at its lowest point in 14 months. It has lost an estimated 20% since the start of the year. Global macro concerns and the Indian central bank's resolve to tame inflation even if it comes at the cost of economic growth are two of the primary reasons behind the poor performance of the stock market in recent times. Thankfully though, unlike the western world, the problems afflicting India are more cyclical in nature than structural and hence, any tendency on the part of the markets to overreact should be looked upon as an opportunity to buy into the long term India story.
As per a business daily, Hotel Leelaventure signed a pact with Travancore Enterprises to transfer its hotel property in Kerala to a special purpose vehicle (SPV), for a consideration of Rs 5 bn. As per the management the deal is a part of the company's overall debt reduction scheme. It would bring down the debt to equity ratio to 0.7 debt times from the present 1.83 times. The company is also planning to raise capital through a qualified institutional placement (QIP), which will help reduce debt. With the fund raising plan and disposal of the other non-core assets in Pune, Hyderabad and Bangalore, the company plans to bring down its debt to a level of 0.7 times equity within 24 to 36 months.
Hotel Leelaventure officially launched its new 260 room property Delhi property in April 2011. A 332 room property in Chennai is coming up and is expected to be operational by mid 2011. This property will take the room inventory of the company to over 2,197 rooms. More properties for the company are coming up in Agra, Jaipur and Ashtamudi, Kerala. However, FCCBs worth US$ 67 m maturing in April 2012 have been a cause for concern.
Steel Authority of India (SAIL) has raised Rs 4 bn via 10-year bonds at a coupon rate of 9.3%. Recently, SAIL board had accorded in-principle approval for setting up 10 steel processing units (SPU) in different states across the country. The SPUs will be launched in states like Bihar (Bettiah, Mahnar and Gaya), Assam (Guwahati), Uttar Pradesh (Lakhimpur), Jammu and Kashmir (Srinagar) and Himachal Pradesh (Kangra). The company is in the process of raising its capacity by 5.5 m tonnes which is expected to get commissioned towards the end of the financial year 2011-12. Although the prices of steel have remained stable, demand for steel is slowing down due to inflation, higher interest rates and slowdown in Chinese demand.