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 Amazon.com 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