Monday, October 27, 2008

Experts speak : All is not lost

A 90% drop in real estate stock market values is now a reality. Moneycontrol.com has list of current stock price and its annual performance. All we need now is a price reduction in selling prices, not gimmcks like free car, free flat or free plots. We are not stupid guys. How long will it take for you to realize this ?
Expertspeak: All's not lost
27 Oct, 2008, 0000 hrs IST, ET Bureau
Every cloud has a silver lining if seen from the perspective of equity analysts. Forget the fact that the Sensex has dropped 70% and many stocks dropped 90%, the experts are trying to reason and assure the investors that all is not lost. Ofcourse all is not lost. A 10L portfolio is still worth 2L even today, but as the Unitech chariman said on CNBC, they have not reduced housing prices, inspite of borrowing at 2.5 per month from legal sources. Many builders are borrowing at 3-5% per month. How can they recoup their losses when the buyers have vanished from their 1cr+ properties. The end is near as far as the housing bubble is concerned. Stock prices are a leading indicator of the days ahead. The housing companies used absurd metrics to value their property and investors lapped onto their lofty projections, some due to greed others due to ignorance.

MUMBAI: Chin up when the chips are down. The climbing fear index (43 during the 1929 Great Depression and 75 in October 2008), is more disturbing
than the slipping Sensitive Index. It took a good two-and-a-half hours and four of the country’s best stock market analysts to reassure an 800-strong audience of Mumbai investors on Thursday that all’s not lost. Every dip brings in a new buying opportunity was the message.

The Economic Times, Gujarati, last week kicked off its latest initiative “Managing Financial Turbulence” by bringing the fourth edition of “Sensex Ni Sangathe” (In Tune With Sensex), a popular series of investor camps, to Mumbai. Eminent stock market experts Nilesh Shah, joint MD, ICICI Prudential Mutual Fund, Nipun Mehta, ED of Society General India Private Banking, CS Nanda, CCM, financial market investors protection committee, ICAI and Madhusudan Kela, head of equity investments, Reliance Capital Asset Management, reaffirmed their faith in the India growth story. The meet was jointly organised by ET (Gujarati) and ICAI, Western India Regional Council, at Bhaidas Hall in Vile Parle on October 23.

What they said...

Forced liquidation is happening in the market. Fear (among investors) is at the highest level. This is the worst situation in the past 100 years and so an overnight recovery is not on the cards. While the Indian economy is growing at 6.5-7.5%, the world is already talking of a negative growth rate of 0.5% and 1.5%.

Madhusudan Kela
Head of equity investments, Reliance Capital Asset Management

There are some good developments which the market has ignored. This year, we had an average monsoon, Indo-US nuclear deal is now a reality, we received FDI worth $10 billion during the past two quarters, crude oil prices have fallen and inflation is expected to ease out in the coming days. It is just a matter of time when FIIs will be forced to back the winning horse (India).

Nilesh Shah
Joint MD, ICICI Prudential Mutual Fund

Prices are indeed attractive. It’s like the latest McDonald ad campaign ‘Aap ke Jamaane mein, baap ke jamaane ke daam’. Lot of Indian global acquisitions happened at peak prices, and now fund raising has become difficult for these companies. Still, impact on the Indian economy will be limited. Investors need to have a longer time-horizon and take a fresh look at their portfolio holdings.

3 comments:

Anonymous said...

I don’t know why to call them expert. For providing such vague & incomplete information, why can’t they provide the timelines? Every one knows that there is silver lining to crisis.
Take my expert advice, act like a vulture, when the market will see bottom then pick up whatever asset you want to buy. In the initial deal between Barclay & Lehman, Barclay refused to buy complete business then Lehman refused to sell the part of business. Barclay let it fall & after bankruptcy picked up whatever they want at very low price.

When market roared upward for last 4 years, do you think we have reached the bottom in last 3 months?

Anonymous said...

The joke is on the word "Expert". These guys cannot add up 2+2, forget about being experts, a bus conductor or a vegetable vendor will do better job

Tariq said...

These are Market Burgers …. who think about there profit.. They don’t have any dignity.. they will always try to full some one for there benefits …..