Monday, 27 October 2008

Buy Shree Cements: HDFC Securities

HDFC Securities has maintained its buy rating on Shree Cements in its October 27, 2008 research report. "Cement demand growth in India has fallen sharply to 7% against 12% in H12009 and we expect the demand growth to be in the range of 8% for the next two years which may bring down the effective capacity utilization rate for the industry below 80% against our earlier estimates of 87% during FY09."

"At the current market price of Rs 378, the stock trades at a P/E of 3x FY09E and 3.5x FY10E. On EV/Tonne basis, it trades at USD 46 FY09E and USD 39 FY10E. On EV/EBITDA basis, it trades at 2.6x FY09E and 2.6x FY10E. SCM is reaping the benefits of timely capacity addition during FY08 as it increased its capacity by 2 mt during this year, which we expect to result in an earnings CAGR of 12.9% over the period FY08-FY10E. It is also one of the lowest cost cement producers across the Industry, a position we feel it will retain in the coming years. We maintain our BUY rating on the stock," says HDFC Securities' research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions

Source: Moneycontrol

Buy Wockhardt, target of Rs 230: Angel

Angel Broking has maintained its buy rating on Wockhardt with a target of Rs 230 in its October 24, 2008 research report. "For 3QCY2008, Wockhardt posted Sales of Rs 923 crore, registering a yoy growth of 25.1%. For 9MCY2008, the company posted Net Profit of Rs 218.9 crore, a decline of 21%."

"At the CMP, the stock is trading at 4.1x CY2008E and 3.4x CY2009E EPS, which is at a significant discount to its peers. Substantial part of the discount is on account of the high competitive pressures in the Generic space and the company’s dependence on its M&A strategy to scale up its Generic business. A part of the discount is also due to the accounting polices followed by the company (deferment of R&D expenditure). We maintain a Buy on the stock, with a revised Target Price of Rs 230 (Rs 250)," says Angel Broking's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Oriental Bank, target of Rs 224: Karvy

Karvy Stock Broking has maintained its buy rating on Oriental Bank of Commerce (OBC) with a target of Rs 224 in its October 27, 2008 research report. "In 2QFY09, Oriental Bank of Commerce reported NII growth of 31% (Y/Y) to Rs 5.2 billion compared to our estimates of Rs 4.2 billion; much higher than our estimates mainly due higher yield on advances and contained cost of deposits. We estimate that in FY2008-10, the bank's total business and bottomline would grow at 21% and 4.1 % CAGR respectively."

"We believe that the bank would report RoAA of 0.75-0.8% and RoAE of 13.2% in FY2009-10. Due to improvement in NII and fee income we increase our earning estimates for FY2009 and FY10 by 47% and 10% respectively and increase our target price by 24% to Rs 224. We reaffirm our BUY rating with a target price of Rs 224 at 0.86x adjusted book value FY2010," says Karvy Stock Broking's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Shree Cements, target of Rs 653: Karvy

Karvy Stock Broking has recommended a buy rating on Shree Cements with a target of Rs 653 in its October 27, 2008 research report. "Net sales grew by 34.9% yoy to Rs 6.29 billion mainly on account of volume growth of 42% to 2.0 million tones (inclusive of clinker sales). The company has reported adj. net profit of Rs 1.07 billion."

"At the current market price of Rs 378, the company is trading at PER multiple of 3.4x, EV/ EBIDTA multiple of 2.5x and EV/ton basis at USD 46/ tones on FY10E earnings. We have valued the company on EV/EBIDTA of 4x and rate the company as BUY with price target of Rs 653," says Karvy Stock Broking's rearch report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Everest Kanto, target of Rs 310: Karvy

Karvy Stock Broking has maintained its buy rating on Everest Kanto Cylinder with a target of Rs 310 in its October 27, 2008 research report. "During 2QFY09 the company reported revenues of Rs 2,210 million, a strong YoY growth of 73% and sequential growth of 16.8%. EKC reported net profit of Rs 432 million as against Rs 284 million reported during 2QFY08. We expect the company's revenues and profit to grow by 62% CAGR from FY08-FY10. At the CMP of Rs 157 the stock trades at a PE of 6.1x its FY10E earnings. We continue to maintain our BUY rating on the stock with the price target of Rs 310," says Karvy Stock Broking's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Reliance, target of Rs 1734: Motilal Oswal

Motilal Oswal has recommended a buy rating on Reliance Industries with a target of Rs 1734 in its October 24, 2008 research report. "Reliance Industries reported 2QFY09 PAT of Rs 41.2 billion (our est. Rs 41.9 billion); up 7.4% YoY and flat QoQ. We have reduced our FY09 EPS estimate by 3.5% to Rs 108 to account for increased interest cost and lower price for its oil sales and FY10 EPS estimate by 8% to Rs 190."

"We have also reduced our SOTP based target to Rs 1,734 to factor in 1) lower multiple assigned to RIL's core business,due to subdued business outlook 2) cut in share of profit from RPL (reduced GRM assumptions), and 3) revised retail business value (increased risks). We remain positive on the company primarily due to large potential upsides from E&P. The stock currently trades at 9.4x FY09E and 5.3x FY10E EPS. Buy," says Motilal Oswal's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy GAIL, target of Rs 372: Motilal Oswal

Motilal Oswal has maintained its buy rating on GAIL India with a target of Rs 372 in its October 24, 2008 research report. "It reported PAT at Rs 10.2 billion, up 79% YoY from Rs 5.7 billion and 14% QoQ from Rs 8.9 billion. We remain positive on GAIL in view of increase in gas transmission volumes going forward. We expect GAIL’s transmission volumes to increase by 55% in FY10 to 130mmscmd."

"We are cutting our FY09 and FY10 EPS estimates by 4% to factor in the reduction in our LPG price assumption based on recent sharp correction in crude prices. We have also reduced FY10 gas volumes to 130mmscmd to account for delay in commencement of RIL’s gas production to 4QFY09. Our FY09 estimates could see a boost if subsidy burden is reduced due to fall in oil prices. The stock trades at 7.5x FY09E EPS. Our target price is Rs 372 per share. We reiterate Buy," says Motilal Oswal's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Hold Phillips Carbon, target of Rs 139: Nirmal Bang

Nirmal Bang has maintained its hold rating on Phillips Carbon Black with a revised target of Rs 139 in its research report. "PAT for Q2FY09 was Rs 15.4 crore as against Rs 24 crore in Q2FY08 down by 36.1% YoY basis and Rs 14.4 crore in Q1FY09 up by 6.5% on QoQ basis. Tyre manufactures being the major customers of the company & looking at the slowdown in the Auto sector we revise our earnings expectations for the company & reiterate a HOLD rating on the stock with a long term view with a revised target of Rs 139 per share," says Nirmal Bang's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Grasim Inds, target of Rs 1725: Motilal Oswal

Motilal Oswal has maintained its buy rating on Grasim Industries with a target of Rs 1725 in its October 23, 2008 research report. "Revenues grew 8.4% YoY to Rs 26.8 billion, driven by 17% growth in cement revenues and 45% growth in sponge iron revenues. However, higher other income and lower tax provisioning restricted PAT decline at 16% to R 4.2 billion."

"We are revising our earnings estimates downwards by 7.8% (to Rs 250) for FY09 and by 21.8% (to Rs 202) for FY10 to factor in higher cost push in cement and sponge iron, lower VSF demand and pricing, and change in cement pricing assumption. The stock is valued at 4.7x FY09E consolidated EPS, and EBITDA of 3.4x FY09E EV and USD 46/ton. We maintain Buy with a target price of Rs 1,725 (SOTP-based)," says Motilal Oswal's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Buy Bajaj Auto, target of Rs 905: Motilal Oswal

Motilal Oswal has maintained its buy rating on Bajaj Auto with a target of Rs 905 in its October 24, 2008 research report. "Revenues grew 8% to Rs 25.5 billion. Lower depreciation (by 33%) and lower tax rate (at 30.5% of PBT v/s 33.4% in 2QFY08) boosted recurring PAT to Rs 2.27 billion (5% de-growth). We are upgrading our earnings estimates by 12% to Rs 62.5 for FY09 and by 10.8% to Rs 72 for FY10 to factor in savings from the VRS at the Akrudi plant and savings in raw material cost. The stock trades at 7.4x FY09E and 6.4x FY10E EPS. We maintain Buy, target of Rs 905," says Motilal Oswal's research report.

Disclaimer: The views and investment tips expressed by investment experts on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Source: Moneycontrol

Global recession to last 2 years: Morgan Stanley

Chetan Ahya, Managing Director of Morgan Stanley, feels economies will take more time to come out of the global recession. The recession, he said, will take long to get over, and can last for as much as two years. As real economy comes under pressure, we will see rise in non-performing loans, he said, adding that credit markets will recover only once the recession is closer to an end. Ahya added the current account deficit and strong credit growth compounds problems.

Ahya also said the issue of exchange rates remains a key challenge to emerging markets, adding that he sees rupee depreciating to lows of Rs 54-55 per dollar in five or six months.

Source: Moneycontrol

Punjab National Bank (Rs 419.60): Sell

We recommend a sell in Punjab National Bank from a short-term trading perspective. It is evident from the charts of Punjab National Bank that it was on a broad sideways consolidation in the range between Rs 440 and Rs 530 between late July and late October. The stock failed to surpass the upper boundary (Rs 530) of the sideways consolidation during mid-October and started to decline.

Subsequently, the stock penetrated the 21- and 50-day moving averages by tumbling over 6 per cent on October 22. Moreover on October 24, the stock conclusively broke out of the sideways consolidation by slipping 11 per cent, along with the broad market sell-off.

The daily relative strength index (RSI) has entered in to the bearish zone and the weekly RSI is on the verge of entering this zone. Furthermore, the moving average convergence and divergence has entered the negative territory, indicating a sell. Our short-term forecast for the stock is negative. We expect the stock’s decline to prolong until it hits our price target of Rs 375 in the upcoming trading sessions. Traders with short-term perspective can sell the stock while maintaining a stop-loss at Rs 440.

Source: HinduBusinessLine

L&T down 6.5%, loses 70.5% in a month

Engineering and construction behemoth, Larsen and Toubro continues to reel under selling pressure. On Monday, the stock was down by 6.5 per cent, touching a 52-week low of Rs 721.65. It has lost a whopping 70 per cent in the last month alone.

At Rs 729, the stock trades at a price to estimated earnings of 17 times and 14 times for FY09 and FY10 respectively.

CLSA has an 'underperformer' rating on the stock with a target price of Rs 1,000, stating that the company is facing challenging times of credit crunch and likely slowdown in growth of order inflows.

Source: EconomicTimes

Investors should focus on biggies like TCS, Infosys

There is no respite for the IT sector amidst the current market turmoil. The sector was looking forward to the September quarter results, expecting a
bounce-back in its valuations, since historically, IT companies post good performance in the second quarter.

However, despite better-than-expected Q2 results, IT companies are witnessing a sharp fall in valuations. During the current market crash, all the top five IT companies have witnessed a sharp fall in their priceearnings (P/E) multiples. The P/Es of Tata Consultancy Services (TCS), Wipro and Satyam Computer Services have halved from their levels at the beginning of the current calendar year. Global macroeconomic turmoil and uncertainty about future demand scenario are the major reasons for the decline in IT scrips.

During the current quarterly results season, all the top seven players, along with some small and medium-sized companies, have declared results so far. While the Q2 numbers are impressive in rupee terms, the dollar-term guidance given by some of the companies is a cause for concern. Most companies that have stated guidance for the December ’08 quarter have factored in a sluggish trend going ahead.

Companies, including Infosys Technologies and Wipro, expect to see barely any growth in their toplines on a sequential basis, while Satyam expects a much muted growth compared to earlier quarters. What is worse is that it expects a sharp fall in earnings per share (EPS) in the December quarter. Patni Computers has also indicated a drop in sales and net profit, going ahead.

The concern is not limited to the December ’08 quarter. Companies including Infosys and Satyam have cut their forecasts for FY09 as well. These tier-I companies now expect growth in lower single digits for the whole year. In the near term, this spells a rather gloomy scene for the sector, which had seen high double-digit growth so far.

It needs to be noted that the uncertainty about future growth has overshadowed the resilient performance shown by some of the big and small IT players during Q2 ’08. Boosted by a depreciating rupee against the dollar, the top five IT companies recorded a 9.3% sequential growth in revenue, while net profit (PAT) grew by 10.2%. This reflects a marginal expansion of 20 basis points (bps) in net margin at 19.2%. Reckoned year-on-year, sales at the aggregate level rose by 32.4% — much faster than the PAT growth of 18.6%. This means that net margin contracted by 220 bps y-o-y.

Currency fluctuations resurfaced as a potential dampener during Q2 ’08. The rupee depreciated by more than 8% during the quarter compared to the previous quarter. Further, depreciation of the euro and British pound (GBP) against the dollar also impacted the performance of Indian IT companies, which earn more than 80% of their revenues in these three currencies. Among top companies, TCS reported a currency loss of over Rs 261 crore. Wipro reported a forex loss of Rs 28 crore.

Discussions with industry analysts reveal that going ahead, some IT companies, including HCL Technologies, have decided not to take fresh forex hedges, while others such as Infosys have taken a short-term view on hedging. Satyam, on the other hand, has reduced its hedging exposure by half, compared to the figure at the beginning of the current fiscal.

Though the forecast given by IT players is sombre, one ray of hope is that most companies have reiterated they will continue with their hiring plans. Further, the deal pipeline appears healthy, notwithstanding the current global crisis.

Though the future performance of IT scrips depends upon how overall market sentiments shape up, investors are advised to remain focused on biggies, including TCS and Infosys, which have the size and scale to weather the storm. Among mid-sized companies, Mastek looks attractive. The company has shown a stable performance during Q2. Its acquisition last year and its strong hold on the insurance space are expected to keep the company on the growth path.

Source: EconomicTimes

'We need to have a recession'

This time last year, Charles R Morris was wrapping up ‘The Trillion Dollar Meltdown’, a prescient primer on the credit crash. A paperback edition planned for February ups the ante with a revised title: ‘The Two Trillion Dollar Meltdown’. What the US needs most, he says, is a brutal recession to throttle its debt-fuelled buying binge.

“We need to have a recession — a sharp one and a deep one,” says Mr Morris, 68, a ruddy-faced lawyer, former banker and prolific financial writer. He walked me through his revised numbers during an interview in Bloomberg’s Manhattan offices.

Mr Morris’ original calculation that the crisis will result in at least $1 trillion in losses to the banking and other investment sectors assumed an orderly unwinding, which he had predicted wouldn’t happen. Events have proved him right.

The dominoes keep falling — which bank will be next? — amid rising writedowns and losses that already total $660 billion, according to data compiled by Bloomberg. The rescue plan that US treasury secretary Henry Paulson pushed through Congress has yet to stop the rot.

“Since the Paulson plan implicitly assumes a continuing stream of bank losses on roughly the same scale for the foreseeable future, the likely losses are now $2 trillion or even more,” he writes in the revised foreword of a new electronic edition of his book.

The $700-billion bailout emerged from what Mr Morris calls “the caffeinated fog of a frenetic two weeks” that included the bankruptcy filing of Lehman Brothers Holdings, the rescue of American International Group (AIG) and the “night-time elopement” of Merrill Lynch & Co and Bank of America.


Though Mr Paulson’s plan may help ease cash hoarding at banks, it perpetuates the misconception that “we have a liquidity problem, not a solvency problem,” Mr Morris says, leaning forward in his plaid jacket and chopping the air with his hand to emphasise the words liquidity and solvency.

To explain the difference, Mr Morris cites two precedents: The rise of US grain futures in the 19th century and the tulip bulb mania that gripped the Netherlands in the 17th century. “In the 19th century, we had these huge wheat fields in the Midwest,” he says. “But it was very risky to send grain to the East, let alone abroad.”

That was a liquidity problem, and the development of grain futures markets solved it by allowing future deliveries to be sold for cash. As this “fire hose of investment” flooded the grain belt, “we became the Saudi Arabia of food,” Mr Morris says.


During tulip mania, by contrast, traders leveraged up their bulb holdings, taking ever more risk until the bubble burst and prices collapsed. No amount of lending could have restored them, Mr Morris says; the episode was “a parable of insolvency.”

“It wasn’t a liquidity problem,” he says. “You don’t solve that by lending more against tulip bulbs.’

US houses, in short, became tulip bulbs. Banks that forked over cash for a claim on a home’s unrealised value were in essence “selling tulip bulb futures.” The more cash they extended, the more US consumers spent.

“Between ’00 and ’07, total US gross domestic product (GDP) was $92.5 trillion in current dollars,” Mr Morris says. “Our gross domestic purchases were $97 trillion, a $4.5 trillion overrun.”

Where did the $4.5 trillion come from? Consumer debt — almost all of it secured by houses, Mr Morris says. “Between ’00 and ’07, homeowners borrowed $4.2 trillion on their homes that they didn’t invest in their housing or use to pay down their mortgages,” he says.


Personal consumption jumped to an unprecedented 72% of GDP by ’07 from a long-term average of about 66%, Mr Morris says. The upshot: “a false prosperity based on a huge waterwheel of money, fuelling a debtfinanced, import-driven consumer binge,” as he puts it in the new foreword.

When other countries gorged on debt, the US lectured them about the need for austerity, he says. Mr Paulson and Federal Reserve chairman Ben Bernanke, by contrast, are pumping hundreds of billions of dollars into the system. “They’re attempting to avoid a recession,” he says, whispering the R word. “It will make things worse.”

Mr Morris urges the US to instead engineer a recession, as former Federal Reserve chairman Paul Volcker did when he slew runaway 1970s inflation by raising interest rates as high as 20%. Though Mr Volcker’s shock treatment was rough, the US is resilient, Mr Morris says: “We earned it back fast.” “Do what Volcker did,” he advises. “We can get out of this crisis hard and fast or painfully slowly.”

Source: EconomicTimes

Stocks to watch: SBI, Reliance, Zydus Cadilla

Equities are likely to open lower on Monday following meltdown in overseas markets on fears of slow-down in global economy and recession in the US.

Crude oil prices fell to a 17-month low Monday, extending the previous session's $4 loss, as an emergency production cut by OPEC was shrugged off by traders anxious about the onset of a deep global recession. US light crude for December delivery fell 22 cents to $ 63.93 a barrel, after touching a 17-month low of $63.67. Prices tumbled by $3.69 on Friday, taking the full-week loss to 10 percent.

Rupee continued its downward march and plunged to 50.05 against the dollar in early trade on heavy dollar demand from importers amid melting stock markets.

A committee led by the finance secretary Arun Ramanathan has made out a case for using a part of the country’s foreign exchange reserves to provide liquidity support to Indian banks for their overseas operations. The committee, appointed by the finance minister to assess the liquidity situation, has said that a portion of India’s forex reserves, aggregating $273 billion, could be used to invest in securities such as bonds issued by foreign offices of Indian banks. This may benefit banks like State Bank of India and ICICI Bank.

The government may appeal to the Bombay High Court to allow distribution of Reliance Industries’ (RIL) Krishna-Godavari (KG) basin gas through public sector Gail India’s pipeline so that the national resource can be used by gas-starved industrial units. Concerned over the on-going court battle between the Ambanis over the KG gas, and the consequent delay in its production, the empowered group of ministers (EGoM) on Thursday billed it as one of the interim solutions.

Zydus Cadila, has taken Teva Pharmaceuticals, the world’s largest generic drug maker, to court in the US seeking damages for Teva’s antitrust violations and unfair trade practices relating to a drug called risperidone. The $2.5-billion (approximately Rs 25,000 crore) drug is widely used for treating schizophrenia.

It is turning out to be a double whammy of sorts for companies that have taken a hit on account of mark-to-market (MTM) losses due to their exposure to forex derivatives. These companies may find it difficult to convince the income tax (I-T) department to allow MTM losses as deduction.

Source: EconomicTimes

RIL stock skids 66% in the downturn

From August '07 to January '08 when stocks rallied from strength to strength, Reliance Industries was the catalyst for the the 7,000-point sensex rally. But, ever since the fall started since January 10, it is again Reliance, according to data, may be the chief reason for bringing the benchmark down in the quicker and sharper downturn.

The world may have changed for Indian stocks and Sensex may have come down substantially but the the most influential stock in the 30-share bellwether index -Reliance still remains the match-maker. While the stock price has corrected by Rs 2,000 a share, Sensex came down by 12,500 points.

Extrapolating this, it is fair to say that for every one rupee shed by Reliance stock, Sensex has fallen by close to 6 points, according to analysts. When sensex went up by 49% in just 7 months (August to January) Reliance, which carried a weightage of 15.3% in early January, witnessed its stock price outperform the benchmark index and raised by 73%.

While the DLF stock went up by over 90% in the same period, the real estate company carried a meagre sensex weightage of 2%.

The impact of Reliance's rise is significant on Sensex as blue-chip firms SBI, ITC, ADAG-controlled Reliance Comm and ONGC cumulatively held a weightage of close to Reliance"s 15% in January. "The Reliance stock is pivotal to sensex's fortunes. There has hardly been any day, when Reliance has fallen and has not pulled down sensex alongwith it. Nobody remains unaffected when the big boy falls," said a large broker at Bombay Stock Exchange.

During the downturn, the Reliance stock has fallen by 66%, again outperforming Sensex which has shed 59% in the same period.

Although Sensex constituents such as RCom, Larsen & Toubro and DLF have fallen by 75-80% in the same period, which is sharper than Reliance, the three stocks have a cumulative weightage of just under 10% (which is less than Reliance's 12% influence), data shows.

One half of all Sensex companies taken together i.e around 15 stocks have just the same influence that a single scrip has: Reliance. DLF may have corrected by over 80% but Reliance's freefloat market cap is 14 times more than it. "Sensex is calculated under free-float market capitalisation method.

This means that the influence of closely-held companies such as DLF on the index is preventing even if their stock price fall is much sharper," the research head of a foreign brokerage explained.

Source: EconomicTimes

Home prices may start falling in Jan-March

Potential home buyers who have been deferring their purchase decisions, may have to wait till April-May to get a good deal.

The ripples of the ongoing financial crunch, coupled with mounting pressure from various other circles, will peak between January and March. That’s when many developers will be forced to sell the unsold stock at a much cheap price, feel industry experts.

“The signals are very much visible. Developers are already offering lots of freebies. I feel, they will hold on to prices till the end of the festive season. If sales are not happening in the current quarter, the Jan-March quarter will see a price crash in some pockets, and in the first quarter of the next fiscal, developers will be forced to sell homes at a much lower rate as their loan repaying capacity will be under challenge,” said Anuj Puri, chairman & country head of Jones Lang Lasalle Meghraj.

He added that in the current market scenario, if developers want to bring some cash flow into their company, that will happen only by selling their residential and commercial properties. “All other routes are drying up,” he said.

India’s property market has been among the hardest hit by the global financial turmoil as high interest rates and gloomy economic prospects have driven out buyers and squeezed funds for real estate developers.

Through this year, property prices have already declined more than 10-20%, though in cities like Mumbai and Delhi, prices are still too high for a middle class consumer. Developers like Orbit Corporation has already cut prices by 20% from Rs 26,000 to Rs 21,000 at Parel in Mumbai.

Source: EconomicTimes

Buy a house, get a luxury car for free

Your "dream house" now comes with a free Mercedes or BMW, or at least a few gold coins. In some cases, even a small flat is being thrown into the deal for those eying premium segment bungalows. As a slowdown in the realty sector stares developers in the face, these are some of the innovations they are coming up with to keep buyers interested.

Other builders have started shifting from the premium housing sector and are launching projects in the more affordable range for middleclass buyers.

Are these signs that realty prices will drop in the near future? Assotech CMD Sanjiv Srivastava said, "I wouldn't advise people to wait for prices to drop. If you are getting a property at a good location, bargain hard and close the deal." But Anshul Jain, CEO of the India arm of global property consultancy firm, DTZ, has a diferent take. "Yes, a correction in property prices is on its way," he said.

Many builders said they were now concentrating on the middle segment. Manoj Gaur, promoter of Gaur Sons, said the group had launched projects in Indirapuram in the range of Rs 2,500 per sq ft to suit middleclass buyers.

The promoter of Ashiana Housing, Rohit Modi, said they had started an apartment project at Rs 2,100/sq ft on NH 58 in Ghaziabad. Till six months back, apartments at these places were quoting at upwards of Rs 3,000/sq ft.

Not only this, many developers are reducing the floor size of the flats from 2000 sq ft to around 1,200 to 1,500 sq ft. This translates to a fall in the price of a three-bedroom apartment from Rs 60 lakh to around Rs 30 lakh.

Gaur said though sales of premium segment apartments had been hit, demand for mid-segment housing was okay. A number of projects in mid-segment are being launched in Gurgaon too in the price range of Rs 35-45 lakh

Source: EconomicTimes

Mexico to borrow up to $5 billion in financial stability plan

Mexico's central bank on Monday announced a financial stability plan including an increase in its foreign debt of up to five billion do
llars, a statement said.

Mexico "will increase the financing planned originally for 2008 and 2009 with international financial organisms like the Inter-American Development Bank and the World Bank up to a sum of five billion dollars," the statement said.

Source: EconomicTimes

Recession reality setting in- slowly

The more than $4 trillion that governments have thrown at the financial crisis pales in comparison with the wealth destroyed in falling stock markets, and conditions may get worse as economic reality sets in.

While there are some encouraging signs that efforts to revive credit markets are beginning to gain traction and lending is slowly resuming, companies are sounding the alarm over the damage already done to their profits.

Japan's Sony is finding fewer buyers for its cameras and televisions. French carmaker PSA Peugeot Citroen is planning "massive" production cuts as demand fades. Online retailer is warning that holiday sales won't be as strong as expected.

The sheer volume of companies reporting disappointing earnings is as distressing as the breadth of industries and countries affected.

"We are now in the midst of a full-blown global financial crisis," said Citigroup analyst Robert Buckland. "Policy-makers have been unable to calm the storm, although the increasingly aggressive response offers some hope. The earnings downturn looks to have much further to go."

In the five weeks since investment bank Lehman Brothers collapsed, stock markets have fallen so sharply that they have wiped out $12 trillion in wealth, according to Citigroup.

Consumer and business confidence has also nose-dived since then, and spending has fallen sharply.

That will no doubt weigh heavily in the Federal Reserve's decision Wednesday on whether to cut short-term borrowing costs.

Investors widely expect another half-point reduction, which would take the benchmark federal funds rate to 1 percent.

When the credit crisis first spiked in August 2007, the rate stood at 5.25 percent.

success in easing the credit market strains that drove up borrowing costs and effectively barred many healthy borrowers from accessing cash.

Interbank lending rates have begun to ease and bank borrowings from the Fed slipped last week for the first time since Lehman's collapse.

If those trends continue, it would go a long way toward fostering a quicker economic recovery.

However, the short-term damage is already done.

A report due Thursday is expected to show that the US economy contracted at a 0.5 percent annual pace in the third quarter, according to a poll.

JPMorgan economist Bruce Kasman thinks things may get much worse from there. He is predicting that GDP will decline at a 4 percent clip in the fourth quarter, which would be the worst since 1982.

Source: EconomicTimes

TCS has support at Rs 450: Gujral

Technical Analyst, Ashwani Gujral is of the view that TCS has support at Rs 450.

Gujral told CNBC-TV18, "Infosys continues to remain in the range of Rs 1,000 to about Rs 1,200. TCS is at new lows, so I don’t think that’s quite strong. I think Rs 450 is a support, below that it could really get up to Rs 380 now."

He further added, "Satyam has also been holding up but all of these strong areas will now also start getting taken down. It has support around Rs 240-250 again Rs 320-325 will be a resistance. So really these largecap technologies at best will be rangebound, but they will also be at a serious risk because everything else has been beaten down so much."

Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the above stock/sector.

Source: Moneycontrol

Buy Tata Steel and Hindalco: Sukhani

Technical Analyst, Sudarshan Sukhani is of the view that one can buy Tata Steel and Hindalco.

Sukhani told CNBC-TV18, "The pullback need not come today. My point was in the day and it still is that we had this excessive exuberance – irrational exuberance and irrational pessimism. We are down 11-12% but the US markets are not down 12%. So this is an extreme on the downside and I do not think this should be sold into"

He further added, "If somebody has the courage then the right approach – if one has the money, not on any kind of margin – if you have the money one could really go down and buy Tata Steel and Hindalco. I have done that today."

Source: MoneyControl

Valuations attractive, buy now: Experts

The Sensex broke another psychological mark of 8,000 today while the Nifty slipped below the 2,300 level as well on weak global cues and intense unwinding by foreign institutional investors. Asian markets are also trading deep in the red. The market is expecting some Policy action from the government to calm investor sentiment, but has not been forthcoming.

The Sensex lost 971 points and is trading at 7,729. The Nifty fell 320 points to 2,264 at 1:15 pm. The Sensex has fallen 62% in 198 days. It has fallen 40% in Ocober, or from 13,203 to below 8,000.

Nitin Raheja, CIO, Rada Advisors, said valuations look attractive at this point.

He said the huge sell-off could be attributed to the crisis of confidence. “Resurrecting confidence in the market will require an all round effort from all participants in the market, whether it is the investors, regulatory authorities, and corporates for that confidence to come back before equities can again become an asset class where one wants to actively invest.”

Raheja feels the index levels may go down lower in November. However, he sees some sort of support coming in and some value buying and stimulus emerging into the market in the next one month. “Valuations today are very clearly justifying buying in the market. You have this whole liquidity paradigm where one sees reverse liquidity flows. You are not really seeing any kind of buying support happening at the domestic end.” He expects a sharp reverse rally.

Raheja believes corporate results have not been as bad as the stock prices make it out to be and said that the markets were falling not due to results or fundamentals but due to lack of liquidity and reverse liquidity.

Source: MoneyControl

DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. The author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and that you confirm the facts on your own before making important investment commitments.