Friday, February 23, 2007

Top 7 days losers on the NSE

Massive losses in majorr scrips over the last 7 days. A group shares down -10%, B group shares are down -20%. This is not a correction, Its a major trend reversal. Due to the high weightage of Reliance and other large caps in the BSE sensex which have corrected 5%, the decline in the Sensex hasn't revealed the true nature of the bearish trend over the past few months

NSE (NIFTY) 7 Days Losers 23-Feb-2007
Company Latest Close Compared To Absolute Change % Change
GRASIM IND 2270.25 2653.90 -383.65 -14.46
JET AIRWAYS 639.50 724.90 -85.40 -11.78
ORIENTAL BANK 199.45 222.60 -23.15 -10.40
A C C 914.45 1017.65 -103.20 -10.14
GUJ AMB CEME 123.20 136.75 -13.55 -9.91
RANBAXY LAB. 356.55 393.35 -36.80 -9.36
HIND LEVER 188.15 205.95 -17.80 -8.64
MTNL 138.75 151.80 -13.05 -8.60
O N G C 830.00 906.25 -76.25 -8.41
VIDESH SANCH 393.80 428.20 -34.40 -8.03
NSE (OTHERS) 7 Days Losers 23-Feb-2007
Company Latest Close Compared To Absolute Change % Change
MARICO IND 57.80 584.75 -526.95 -90.12
GOLDSTONE TECH 72.20 94.45 -22.25 -23.56
TOUBRO INFO 19.60 25.05 -5.45 -21.76
RUCHI INFRA. 33.80 43.10 -9.30 -21.58
PARAMOUNT COMM 39.10 49.50 -10.40 -21.01
PRAJAY ENGRS 216.35 269.70 -53.35 -19.78
G M R TECHNO 189.60 234.20 -44.60 -19.04
MOT&GEN FIN 49.30 60.80 -11.50 -18.91
WALCHANDNGR 1529.05 1872.95 -343.90 -18.36
STANDARD IND 43.40 53.00 -9.60 -18.11
BSE (SENSEX) 7 Days Losers 23-Feb-2007
Company Latest Close Compared To Absolute Change % Change
GRASIM IND 2271.10 2653.65 -382.55 -14.42
A C C 915.65 1017.55 -101.90 -10.01
GUJ AMB CEME 122.85 136.50 -13.65 -10.00
RANBAXY LAB. 356.45 393.50 -37.05 -9.42
HIND LEVER 187.45 205.75 -18.30 -8.89
O N G C 830.25 905.40 -75.15 -8.30
H D F C BANK 957.45 1041.85 -84.40 -8.10
WIPRO 623.25 676.00 -52.75 -7.80
SATYAM COMPU 448.75 485.45 -36.70 -7.56
REL COM 432.35 466.50 -34.15 -7.32
BSE (AGROUP) 7 Days Losers 23-Feb-2007
Company Latest Close Compared To Absolute Change % Change
GRASIM IND 2271.10 2653.65 -382.55 -14.42
CUMMINS 257.95 292.60 -34.65 -11.84
ARVIND MILLS 50.50 57.10 -6.60 -11.56
IDBI 86.65 97.95 -11.30 -11.54
TITAN INDUST 889.80 1005.15 -115.35 -11.48
CENTURY TEXT 551.35 621.60 -70.25 -11.30
BANK OF INDIA 157.60 177.55 -19.95 -11.24
MPHASIS BFL 274.95 306.70 -31.75 -10.35
BHARAT ELECTRONIC 1556.70 1734.05 -177.35 -10.23
ORIENTAL BANK 200.00 222.70 -22.70 -10.19
BSE (B1GROUP) 7 Days Losers 23-Feb-2007
Company Latest Close Compared To Absolute Change % Change
MADHAV MARBLE 100.15 134.10 -33.95 -25.32
JUPITER BIOS 157.65 204.40 -46.75 -22.87
GOLDSTONE TECH 72.20 93.20 -21.00 -22.53
MODIPON 108.15 139.55 -31.40 -22.50
HATHWAY BHAW 23.40 30.10 -6.70 -22.26
PARAMOUNT COMM 38.85 49.25 -10.40 -21.12
G M R TECHNO 188.30 235.00 -46.70 -19.87
ENCORE SOFT 34.25 41.95 -7.70 -18.36
HINDOO SPG 44.45 54.15 -9.70 -17.91
STANDARD IND 43.65 52.90 -9.25 -17.49
BSE (B2GROUP) 7 Days Losers 23-Feb-2007
Company Latest Close Compared To Absolute Change % Change
CONART ENG 32.85 43.20 -10.35 -23.96
OSCAR INV 413.50 534.30 -120.80 -22.61
WALCHAND CAP 1077.45 1392.30 -314.85 -22.61
MEFCOM AGRO 109.40 141.30 -31.90 -22.58
B C C FUBA 27.20 35.05 -7.85 -22.40
TOUBRO INFO 19.40 25.00 -5.60 -22.40
CENTRAL PROV RLY 55.00 70.80 -15.80 -22.32
RIGA SUGAR 34.65 44.25 -9.60 -21.69
CAPITAL HOTELS 16.00 20.35 -4.35 -21.38
RUCHI INFRA. 33.80 42.90 -9.10 -21.21
BSE (ZGROUP) 7 Days Losers 23-Feb-2007
Company Latest Close Compared To Absolute Change % Change
INTELLVISIONS SOFT 156.75 202.40 -45.65 -22.55
RITESH INDUS 61.15 78.85 -17.70 -22.45
ASIA FAB 16.70 21.45 -4.75 -22.14
MAZDA 120.00 154.10 -34.10 -22.13
TRIPEX OVERS 142.65 182.25 -39.60 -21.73
SHREE RAM 371.85 470.80 -98.95 -21.02
KAMANWALA IND 184.85 232.80 -47.95 -20.60
ROYALE MANOR 23.40 29.40 -6.00 -20.41
BRAKES AUTO 16.75 21.00 -4.25 -20.24
B C C FINANCE 17.60 21.95 -4.35 -19.82

Thursday, February 22, 2007

Mukesh, Anil eye Bangalore IT project - Bidadi

Forget Devanhalli, and other places in Bangalore.. This will soon be the hottest place for the next few years.

Ambani brothers -- Mukesh and Anil -- are the only two Indians of the 24 bidders shortlisted for the Rs 50,000 crore, 10,000 acre Knowledge City being developed specifically to meet the requirements of the IT industry's growth in Karnataka.

The other developers are from across the globe, including players from Dubai, Europe and Asia.

The project is being developed in Bidadi, around 25 km from the city limits of Bangalore. When completed, the township will meet the space requirements of the IT industry in Karnataka for 10 years, growing at 30 per cent a year and will have the capacity to house 7.5 lakh employees.

M N Vidhyashankar, secretary -- IT, biotechnology and science & technology, Karnataka government, on Thursday said this project would be an integrated township, which would have office space, residential colonies, hospitals, shopping malls, schools and all the required amenities. He was speaking at an interactive session with the Bangalore Chamber of Industry and Commerce.

"We expect to hand over the land to the developer by April this year and work on the first phase is expected to kick off during the second half of the year. Then it will take around 18 months for the initial phase to be commissioned," he said.

The first phase will involve work over 2,500 acres.

The Knowledge City will be connected to the upcoming Bangalore International Airport by an eight-lane highway, which when completed will connect the airport and the Knowledge City in a 30-minute drive.

"One of the criteria for companies setting up shops in this campus is that employees must reside in the complex, which will result in less congestion in Bangalore city," Vidhyashankar said.

The state government is also moving fast to set up the country's first IT finishing school for graduates tailored for the requirements of the industry. "Three Indian IT companies are setting up this school in Mysore with affiliation of the Mysore University. This school, which will offer a 12-month diploma course, will churn out 5,000 students in the first year and is, subsequently, expected to scale up this to 20,000 students in the coming years," he said.

In addition to the knowledge city for the IT sector, the Karnataka government has also awarded the biotech park contract to US-based Alexandria Real Estate Equities Inc.

"Nearly 90 per cent of the biotech parks in the US have been developed by this company and this is the first time it is venturing into Asia," Vidhyashankar said.

The project will be developed across 106 acres in the Electronic City at an investment of Rs 550 crore.

Wednesday, February 21, 2007

Realty investors start taking exit route


Amrish Shah (name changed) is a “family man” and heavily into investments, real estate taking 50 per cent of his decision space. The year 2004, for Shah, 46, was what he called “the real Diwali” as he explains: “The home loans were at the lowest at 7.25 per cent, while the rental yields across the city had just begun their climb.” It made perfect sense for investors like Shah to join the realty bandwagon, and as the Mumbai skyline changed, so did Shah’s kitty.

Shah made 10 realty purchases, starting from Navi Mumbai to Kandivli and finally touched the central suburbs by early 2006. All these purchases were backed by home loans and tax benefits. This month, Shah has finally started exiting from his realty investments. Reason? As financial planner Amar Pandit from My Financial Planner says, “The fingers have started burning. The gulf between the rental yield and the soaring EMI has widened to an extent that it does not make sense.”

It is investors—or speculators who buy houses and later sell them to make a profit—like Shah who make for the 15 per cent of this realty market; and now they have started taking an exit route from the real estate market, “thanks to the phenomenon called rising interest rates”, says Pandit. In short, rentals have failed to keep pace with EMIs.

The rising interest rates are changing the calculations of home buyers, especially investors like Shah. Since the recent interest hike to 10.5 per cent, Pandit has been getting calls from investors like Shah, who, he says “were the people who are partly responsible in bringing the rates to these levels.”

Of course, like Pandit reveals, Shah who is now his client has locked interest rates for loans for five of his properties towards the end of 2006, before it escalated to current levels.

While not necessarily all of them availed loans to bite into the reality crust, the ones who did now have to move out due to the “less than viable option” in hand. Of course, the growth in interest rate, as banking firms put it, is due to other factors like the rising “cost of funds” following measures by the Reserve Bank of India and the government against inflation.

So who is the real gainer in a property market, where on the one hand property prices are escalating, along with rate of interest resting somewhere between 9.5 per cent and 10.5 per cent for floating loans, and in some cases at 11 per cent for fixed loans? Not the genuine buyer, for sure. Chartered accountant Deepak Tikekar from central Mumbai has been getting calls from his clients who he calls “the much-troubled middle class”.

Their concern, explains Tikekar, “stems from the not so recent phenomena of rate of interest in home loans which has only increased their outflows.” Very few banks offer the option of fixed rates, as they explain that “the pressure is too high” especially since the “fear of risk is phenomenal”. With the mutual funds and stocks giving anywhere between six per cent to 65 per cent rate of returns, says Nilesh Shah, chief investment officer of Prudential ICICI, buying a house in the long term as an investment option only makes sense if the rental yield from an appreciating capital is on the upward trend.

That is a different story, that Tikekar’s clients have started looking at Pune as a place to have a nameplate, since their earnings only permit those levels. He feels that with the market cooling off, the interest rates should also see some decline.

HDFC chairman Deepak Parekh says, globally, real estate prices rise and fall whereas here they have gone up but not come down. “In Japan, real estate remained depressed for 15 years and in the US, there has been a slowdown in recent months,” Parekh says, adding, “high prices cannot sustain for a long time.”

According to a spokesperson for HDFC, they have seen a growth rate between 25 and 30 per cent consistently, as most of their loan purchasers are the genuine home buyers for self occupation. “We do not see any slowing down in the rate, as the tax benefits that one gets of the loan have also improved over the years.”

So who benefits the most in the present scene? “The developer,” replies Pandit. But, not for long as prices will soon see a cooling. Parekh says high prices in the real estate sector and rising interest rates will see some investors exit the market. The dip is already visible in markets in Delhi and Bangalore, and Mumbai can’t be far behind.

Rising EMI

Two years ago at a floating rate of 7.25 per cent, a person availing a home loan for Rs 15 lakh for 20 years would have shelled an equated monthly installment (EMI) of Rs 11,856. Today, the same loan amount will pinch him more-as the EMI will work up to Rs 14,976 now. So how do you explain a jump of 26 per cent in EMI settlement in two years?

HDFC, the leading mortgage financer in the country says that "the cost of credit has gone up."

However, for middle class Mumbai with dreams of better housing this could mean a big jolt, considering eighty per cent of cost of a house is covered by housing loan in most of the cases. Also, the average loan amount is normally above Rs 15 lakh, as the houses no longer come cheap.

Rents Have Dropped By Over 30% In The Last Year

The Economic Times

Firmly established as a global technology hub, Bangalore’s IT suburb Whitefield has seen property prices soar consistently over the past five years, until now. In a marked shift, commercial property rents have seen a drop of over 30% in the last one year. A correction has taken place in the IT neighbourhood. The key reason, apart from connectivity-related problems, is oversupply.

Commercial absorption in Whitefield stood at a little over 2 million sqft in 2006. This year, the demand-supply disconnect is to widen. The supply situation is pegged at over 6 million sqft, while demand continues to hover at around 2 million sqft — an oversupply of roughly 4 million sqft. “The challenge in a micro-market like Whitefield is not the lack of demand, but a situation of oversupply, a common problem among metros in India. Also, infrastructure development has failed to keep pace with the real estate growth story. With newer IT centres emerging away from the two main IT clusters, Electronic City & Whitefield, campus developments are being forced to lower rentals in Whitefield in order to attract IT firms,” says Ankur Srivastava, MD, DTZ Debenham Tie Leung. The shift is towards campus developments coming up in close proximity to the city’s Outer Ring Road. The other emerging IT centres are Sarjapur Road and Old Madras Road, where accessibility is better than it is in Whitefield.

As a result, the going rate in the case of commercial rentals in Whitefield, which stood at around Rs 30 per sqft a year ago for an ‘A’ grade property, has come down to Rs 20 per sqft today. Rentals for ‘B’ grade properties are even lower, quoted at around Rs 17 per sqft. ITPL too has witnessed a slight fall in rentals. “While peak-time rentals were at Rs 50 per sqft, the same today is at Rs 44. With the situation getting worse by the day, ITPL rentals could end up in the Rs 35-40 bracket in a year’s time,” said an industry analyst.

“The interest in Whitefield is lower these days. Connectivity is a major issue for those who have to commute to and from Whitefield and surrounding areas. A number of software companies are prepared to pay a premium to move to a location with easy accessibility,” says Manisha Grover, national director, Jones Lang LaSalle India.

Source: Economic Times

Tuesday, February 20, 2007

Real Estate Doom

Many of us instinctively feel that buying property is always a good, safe and sound investment. One that will eventually turn out right no matter what the future brings. Consequently, many of us are getting into serious financial trouble because of this delusion. I'm sorry to put this in such an alarmist fashion but that's exactly what my intention is.

Rising interest rates and stagnating real estate prices may be just an inconvenience for the cautious home owner but it could spell disaster for a new class of real estate investors that have come up in our cities in recent years.

The huge real estate boom that's been on for about four years now has given rise to some distinct types of buyers. At the bottom are those who have bought a house or an apartment for their own use. Depending on how much of their income goes into the EMIs of their home loan, these people will get uncomfortable (either a little or a lot) but it will work out for them in the end. At the other end are the big developers whose fate depends on their finances and their risk control.

In any case, each is a different story altogether. In the middle are the category of people who are most at risk. They have other professions and businesses but have been lured into channelising a large proportion of their money into real estate.

Unfortunately, the standard mode of 'investing' in real estate is not investing but is closer to what is called margin trading in other kinds of investing like stocks. For those unfamiliar with this activity, I'll quickly explain. Conceptually, margin trading means buying an investment on borrowed money for which the investment itself is the guarantee.

Normal (non-margin) trading works like this. If you have Rs 1 lakh and you buy shares share worth that much, you pay the broker Rs 1 lakh. If the shares go up to Rs 1.1 lakh, you've made Rs 10,000 on an investment of a lakh which is a gain of 10%. In margin trading, you would give your broker the one lakh and he would let you buy, say, Rs 10 lakh worth of shares. Basically, you would be borrowing Rs 9 lakh on the strength of the one lakh that you've put down.

You would, of course, have to pay interest and the shares would not actually be transferred to your name.

Now when the stock price rises 10%, your effective gain would be Rs one lakh on an investment of Rs 1 lakh (minus interest), a far more handsome return. But the catch is obvious. A 10% gain could double your money but a 10% loss could wipe out all your money. Margin trading is clearly a high risk-high gain activity.

Most real estate investing nowadays is actually margin trading of a kind that is even more dangerous than that in the stock markets. When real estate investors buy a property by putting down 10% or 20% of its value and borrowing the rest, then they are actually not buying anything, they are just speculating on something that the bank owns. So far, they have all been ahead of the game because prices have risen relentlessly. You put down Rs 10 lakh and buy something for a crore. A year later, the property is worth Rs 2 crore and you feel that you've made Rs 1 crore on an investment of Rs 10 lakh.

The problem is interest rates and liquidity. You've actually made a 15 or 20 year commitment which is looking increasingly dangerous the way interest rates are rising. But the bigger problem is liquidity.

In mutual funds or stocks (the bigger stocks), you can at least cut your losses at any point.

Real estate markets, however, tend not to offer liquidity in bad times. Either the prices are rising, or there are just no buyers except at distress prices. My hunch is that at least in residential property, we will enter a phase in which highly-indebted middle level amateur 'investors' will make lots of distress sales, perhaps to the benefit of the individual house owners as well as the deep-pocketed long-term developer

Monday, February 19, 2007

RIL offers hefty price for farmland reports
Reliance Industries, India's biggest company by market value, is offering Rs 37.5 lakh a hectare, over 10 times the ready-reckoner price, to acquire 10,000 hectares of land from farmers for its special economic zone on the outskirts of Mumbai.

By a rough estimate, the company will have to pay Rs 3,750 crore for land acquisition.

The company is offering Rs 25 lakh a hectare for land under paddy cultivation.

On top of this, the firm is offering Rs 12.5 lakh per hectare if a farmer does not opt for the land offered by the company at an adjacent site. Reliance has earmarked 12.5 per cent (1,250 hectare) of the total land to be acquired for farmers.

The company will also offer free vocational and technical education to a member of each of the 17,000 families whose land is acquired.

During the training period, the minimum agricultural wage of Rs 60 a day will be paid as stipend. If a landowner does not want the training, he is entitled to Rs 3 lakh as one-time compensation.

The ready-reckoner rate is the one taken to compute stamp duty in real estate transactions. Builders complain that it is often higher than the rate at which transactions are struck.

"We have submitted our compensation package to the state government. But if it asks us to give even higher compensation to farmers, we will be bound by that," said Dilip Chaware, the spokesperson for the company.

Unveiling its plans on Monday, Reliance Industries said it would invest Rs 31,000 crore over 10-15 years in its SEZ project, which would come up as two adjacent zones on more than 14,000 hectares. The company would spend Rs 16,000 crore in the development of infrastructure.

"Although we call it a special economic zone, it is going to be a city," Chaware told reporters. The entire project combines two adjacent zones in Mumbai and Navi Mumbai. "The project will be floated by companies that are a part of the Reliance Group."

The group, which is setting up another SEZ at Navi Mumbai, has already been sanctioned 1,600 hectares of the 4,000 hectares needed.

SBI PLR up by 75 basis points

Existing housing, educational loans will be excluded

MUMBAI: State Bank of India on Monday raised its benchmark prime lending rate (BPLR) by 0.75 percentage point to 12.25 per cent from Tuesday, an SBI release said.

However, all the existing housing and educational loans will be excluded from the BPLR change as will new educational loans up to Rs. 4 lakh. Similarly, all the existing and future agriculture production loans less than Rs. 3 lakh will be excluded from its impact.

SBI also increased the rates offered on its super-saver term deposits scheme by modifying its terms.

For a tenure of four years but less than five years, interest rates will be 9.50 per cent, while for senior citizens it will be 9.75 per cent.

For SBI staff, including pensioners of 60 years and above, the rate will be 9.75 per cent.

For a tenure of five years and up to ten years, interest rates will be 8.25 per cent, while for senior citizens, the rate applicable will be 8.75 per cent. SBI staff, including pensioners of 60 years and above, will get 25 basis points more interest at 9 per cent. — PTI

Govt mulls taking away builders’ I-T sops

DNAindia reports

Real-estate developers may be in for some bad news. The Central government is debating on whether or not to extend the income tax benefits under Section 80-IB of the Income Tax (IT) Act beyond March 31, 2007. Under this section, developers constructing residences up to 1,000 sq-ft in Mumbai and Delhi and 1,500 sq-ft in other cities could avail 100 per cent income tax exemption on their profits.

Introduced in the 1998 budget, the tax bonzanza for builders was aimed to promote mass housing. While that (mass housing) has not happened, purchasing a home has become a distant dream for prospective flat buyers. According to senior tax and real estate consultants, the government believes that with investments firming up in the realty sector, the sector does not need incentives.

“Officials also believe that with the market forces determining property pricing, a correction is inevitable,” said the consultant.

“Anway, it is an open secret that unlike in other sectors, developers have not passed on the benefits of the tax rebate to end-users. If one looks at property prices over the past eight-nine years, it has only been rising steadily.”

Realty experts say there is another reason why the act should be scrapped. Developers are known to have the local planning authority approve building plans showing flats less than 1,000 sq-ft in order to avail of the tax concession.

“But to the end-user, he shows a plan having a much bigger area (two flats are combined into one) and which he sells at a hefty premium. And with end users not knowing of this rule, the developer gets away without paying taxes,’’ a planner said, adding that developers in the city make a cool 100 to 200 per cent profit on the sale of each flat.

Though the land prices have increased only in the past few months, developers have been making a cool 100 to 150 per cent profit on each sale. According to National Housing Bank data, in the past, the government has not been able to meet its target of housing for low income groups, in 1999-2000, against a target of 44,000 LIG units, only 27,000 were constructed while in the economically-weaker section (EWS) category, against a target of 96,571 units, only 28,541 were built.

A section of real-estate experts though believe that the Act should be granted extension despite its unsuccessful tenure. Says Ambar Maheshwari, head (Investment Advisory) with global real estate advisors DTZ said: “All this while, developers were not making flats of 1,000 sq-ft, such projects are not lucrative as when compared to large luxury apartments.

With high interest rates and reduced supply of luxury apartments affecting sales, the overheated property market is showing signs of sluggishness. This will make a lot many developers turn their focus to constructing low-cost houses.’’