Sunday, January 31, 2010

India Swaps to Rise on Record Jump in Rate, Morgan Stanley Says

Let the party begin. BoooYaaah. Loan interest rates will go back to 12-13% from 9-10% a jump of 20%. Expect EMI's to rise by greater then 20%. Borrowing costs for builders will jump too and they will want to pass this to the customer, thereby forcing a further decline in affordability. There are no political compulsions for the government to keep rates low. They will use the next few years to reverse the bogus interest policy implemented by the supposedly independent RBI over the past few years. I feel sorry for speculators in Mumbai as the crash in stock markets is going to resonate loudly in the real estate sector. Be very careful of under construction projects. They will hold the biggest risk to the buyer.

By V. Ramakrishnan and Anil Varma

Feb. 1 (Bloomberg) -- India’s swap rates will surge as the central bank increases the benchmark borrowing costs by a record 1.5 percentage points this year to curb inflation, Morgan Stanley said.

The cost of swaps that mature in a year will rise 0.52 percentage point to 5.5 percent by April, Morgan Stanley India Primary Dealer Pvt. Ltd. said. Reserve Bank of India Governor Duvvuri Subbarao on Jan. 29 estimated wholesale-price gains will quicken to 8.5 percent by March from as little as 0.5 percent in September. He also raised reserve requirements for banks and said interest rates will increase “in future.”

“Inflation is becoming a bigger worry and that sets the tone for higher interest rates going forward,” Manoj Swain, Chief Executive Officer at Mumbai-based Morgan Stanley India Primary Dealer, said in an interview. “Upward pressure on swaps will increase because of the rising requirement to hedge against higher rates and tighter liquidity.”

Read more here

38 comments:

Anonymous said...

Bailout watchdog: Response to financial crisis response leaves US with even more risk. ~ January 31, 2010

WASHINGTON (AP) — The government’s response to the financial meltdown has made it more likely the United States will face a deeper crisis in the future, an independent watchdog at the Treasury Department warned.

The problems that led to the last crisis have not yet been addressed, and in some cases have grown worse, says Neil Barofsky, the special inspector general for the trouble asset relief program, or TARP. The quarterly report to Congress was released Sunday.

Anonymous said...

China threatens US arms companies.
Beijing ~ Shanghai ~ January 31 2010

China threatened to impose sanctions on US arms firms and cut cooperation with Washington unless it cancels a $6.4bn arms sale to Taiwan, in an unprecedented move signalling Beijing’s growing global power.

Although Beijing ritually protests US weapons sales to the island, it has not previously targeted the companies involved in the trade. Although the US restricts arms sales to China, a number of the companies that would supply systems involved in the new Taiwan package, which include Boeing, United Technologies, Lockheed Martin and Raytheon, could face pressure in other business areas.

Anonymous said...

Roubini Calls U.S. Growth ‘Dismal and Poor,’ Predicts Slowing.

(Bloomberg) — New York University Professor Nouriel Roubini, who anticipated the financial crisis, called the fourth quarter surge in U.S. economic growth “very dismal and poor” because it relied on temporary factors.

Roubini said more than half of the 5.7 percent expansion reported yesterday by the government was related to a replenishing of inventories and that consumption depended on monetary and fiscal stimulus. As these forces ebb, growth will slow to just 1.5 percent in the second half of 2010, he said.

“The headline number will look large and big, but actually when you dissect it, it’s very dismal and poor,” Roubini told Bloomberg Television in an interview at the World Economic Forum’s annual meeting in Davos, Switzerland. “I think we are in trouble.”

Roubini said while the world’s largest economy won’t relapse into recession, unemployment will rise from the current 10 percent, posing social and political challenges.

“It’s going to feel like a recession even if technically we’re not going to be in a recession,” he said.

Anonymous said...

The sites I’ve been hitting are escalating the gloom and doom talk again. Consensus seems to be 2nd 1/2 of 2010 will show another correction. It’s been reminding me of the beginning of the escalation of chatter before Sept 08.

Anonymous said...

“There is no recovery. The only real economic question facing the world is: Will the economic bottom fall out all at once or will it be a chain reaction? The guillotine, or death by a thousand cuts?

The Trends Research Institute cannot predict what undreamed-of schemes central banks and governments will dream up this time to bail out the toobig-to-fail financial fraudsters, and artificially prop up sagging economies, thereby taking on more debt.

What we can predict is that the commercial real estate collapse, which we forecast for 2009, will intensify in 2010. Though briefly forestalled by government intervention (in the US, TARP, TALF, American Recovery and Reinvestment Act, etc.), the Dubai World debacle is a resounding signal that commercial is crashing. Neither “contained” nor isolated, as alleged, the world is awash in Dubai World clones: overbuilt developments with no possibility of renting and therefore no possibility of paying off highly-leveraged loans. ($3.1 trillion of debt finances the estimated $6.5 trillion of commercial real estate in the US alone.)

” When commercial real estate collapses, the props will be pulled out from under the banks holding the loans. Absent governments coming to the rescue with more prop trillions, the shock from the free-falling commercial sector will irreparably damage the equity markets and reverse modest gains made possible by central bank interventions.”

Anonymous said...

Madarchod BB kithe hai?

SabbalSeshu said...

Anon 9:33

Frustrated ass hole same to you!!!

Venkateswaran K Iyer said...

More activity on this site might indicate an impending crash.

As someone said, internet chatter was intense from beginning 2008 till lehman brothers in 2008 end.

Internet chatter has been bearish on WSJ, CNNmoney and Marketwatch throughout last year. Optimistic sites like Fool.com have collapsed with nobody believing anything.

Traders made money on the leg up. They have finished making money and are ready to make money on the leg down.

I would also advise buying ready made or half constructed apartments only from now on.

Stay away from new launches, they will stall. As will realty IPOs

Anonymous said...

Has any1 come across any builder offering discounts?Any change in the propert prices in Mumbai from last few months?

Anonymous said...

Builders will not give discounts until they get whacked. They are able to get everything from the Govt. and why would they lower the prices?

Moreover, the Govt. is really trying hard for the priced to stay high. Why would you expect a drop in price from builders?

If you really want to buy cheap, then you have to wait for a few years. Why not rent at 1/4th the mortgage price. makes financial sense to me.

Anonymous said...

Actually, the only intelligent thing to do right now is to rent! Anyone buying right now is a moron...

Anonymous said...

I think SabbalSeshu and BB are same person.

Anyway, I think by mid year 2010 or I should say after the Games are over in Delhi, the crisis would start. There is no business for the RE to be as high as it is today.

Afterall, India is not innovating anything. Just doing bodyshopping in IT, using massive stimulus and FDI as a growth measure. With US customers not spending, there will be a loss in exports also.

I read somewhere that the increase in salaries for the Govt. employees was also a stimulus measure by the Govt. to keep the economy propped up. Well, we have to see how long the Govt. can borrow to pay for the excesses they are doing. They are already running huge deficits.

Anonymous said...

Anon:8:48

Sounds like a real idiot. Wishful thinking.

Anonymous said...

Anon above:

Just name any two things that India has invented? And is selling to the world.

Anonymous said...

India has no choice but to extend the stimulus again. The stimulus is close to 15% of the GDP which is 15% of 1.3 trillion USD. ROughly 200 billion USD.

If the Govt. withdraws stimulus, the economy will tank and all these people claiming India is shining will be quiet. Hence, the Govt. will definitely extend stimulus and keep the demand high.
And they would do it to win the next run of elctions. Who cares if the Govt. has to borrow to pay the debts. At least the power players don't. They care only for short term benefits.

Anonymous said...

Govt. is selling thie PSUs to raise money to pay for the salary increase they did. They are trying to raise money to cover thier deficits:

The government currently holds an 89.5% stake in NTPC and it plans to dilute 5% through the FPO. At the floor price, the government would mop up Rs 8286 crore. NTPC's FPO is the first public issue which is adopting the French Auction route to raise funds. Under the French Auction model, institutional buyers are free to bid above a certain floor price. The highest bidder gets preference during the allotment of shares

The market's response to the sale will be significant because the government has some catching up to do to achieve its target of raising Rs 25000 crore in the fiscal year through March by selling stakes in state-run companies. So far, it has managed to net Rs 4259 crore. The Indian government is selling bits of state-run companies as part of efforts to bridge a budget deficit that is estimated to swell to a record 6.8% of gross domestic product in the year through March.

Bindas Bhai said...

The initial public offering of DB Realty, has been oversubscribed by over two times. The Mumbai-based real estate company plans to raise up to Rs 1,500 crore via the issue, which has a price band of Rs 468-Rs 486 per share.

http://www.moneycontrol.com/news/ipo-upcoming-issues/have-22-projectsmumbai-loans-at-rs-80cr-db-realty_439396.html

Last week some Guru in this blog mentioned something contra. Guys use your brains and please do not get carried away by people writing for their selfish motto. We are in for a another boom.

I always told you all guys that RE will not fall in Mumbai and had given the logic but instead of keeping your mind open you guys preferred abusing me. Who has lost in this bargain?

Now it is the right time to invest in A grade office space, will see a boom in two quarters.

All the best guys.


Bindas Bhai

Anonymous said...

when companies (Large ones) are paying 5000 Rs per month to their employees to work from home this asshole is asking ppl to buy office space,

Sandaas ka Keeda is always asking ppl to swim against the current.

Well u guys take part in icici survey on real estate

http://content.icicidirect.com/RealEstateConsumerSurvey.asp?id=0791230157

u need to change the id number in the url to participate in the survey.

Anonymous said...

Sandaas King

IPO of Realty Major Goonda KP Singh, DLF was over subscribed 7 times 3 years back.

Those invested crores into it are shedding their tears.

Priced at Rs 525, it is now 350.
What stupendous returns from Goonda K P Singh's DLF. (Despite Sensex getting doubled in 1 year).

Those who didn't invest and even deposited in FD are sitting pretty now.

Sandaas Pimp has plans to screw you all.

Bindas Bhai said...

Crisil Gives DLF 'A+' Rating
Crisil, a rating agency, has revised its outlook on the long-term debt and bank facilities DLF Ltd, to 'stable' from 'negative' with a rating of 'A+'. The revision reflects the agency's expectation that the strain on the operating cash flows of DLF will reduce in the medium-term, as the real estate sector is on the path of recovery. The positive rating has come as a shot in the arm for DLF, whose chairman Mr KP Singh has been awarded the Padma Bhushan this year for his contribution to the real estate sector.
28 Jan 2010 The Financial Express

Bindas Bhai said...

Right time to invest in equity!!!

All the best.

Bindas Bhai

Anonymous said...

First Things First

In hindi they say 'thotha chana bhaje ghana' . Emplty vessels make much noise.
Same is the case with Bindaas Bhai

Crisil has not given A+ rating to DLF as a company. It has only rated the long-term debt of DLF as A.
read it .
(http://www.crisil.com/Ratings/RatingList/RatingDocs/dlf-limited_20jan10.htm)
Which is no surprised as most PSUs were advised by Goonda K P Singh's politocal commects.
A lot of newspapers have already carried article on that.

But how will Sandaas King understand ratings and all that. Just read something on google and started posting it w/o understanding a thing about it.
A chu8tiy@ like Sandaas ka Keeda can only do this much.

And as far as Padma Bhushan is concerned people on this blog are better judge. If Sant Singh Chatwal can get a Padma , next time charles shobraj would also get one.

Paid news is a phenomenon now and paid blogging is another. A lot of companies are now asking their agents for influencing and lobbying gullible junta on internet. Sandaas ka Keeda is nothing more that that. What does it take for real estate lobby to hire 50-100 paid bloggers at 10K per month to lobby. It still comes cheaper than paying to Toilet Paper of India.

Those who feel they should invest in Realty IPOs please do so, but use your brains, not Sandaas's

Bindas Bhai said...

Now this blog has two Bhais, Bindas Bhai and Sundas Bhai, it is for the people to decide whom to follow/listen.

Bindas Bhai said...

Honda hikes annual f'cast as Q3 beats expectations

http://in.reuters.com/article/businessNews/idINIndia-45868920100203

Bindas Bhai said...

Services growth fastest in 16 mths in Jan - HSBC

http://in.reuters.com/article/businessNews/idINIndia-45868020100203

Bindas Bhai said...

India manufacturing rises; off-cycle rate move unlikely

http://in.reuters.com/article/economicNews/idINIndia-45823220100201?pageNumber=2&virtualBrandChannel=0

Bindas Bhai said...

Siemens grows workforce in India as it trims German jobs

http://in.reuters.com/article/economicNews/idINIndia-45842820100202

Bindas Bhai said...

China, India factories abuzz, recovery intact

http://in.reuters.com/article/economicNews/idINIndia-45809720100201

Bindas Bhai said...

Jan manufacturing growth at 1-½ yr high - PMI

http://in.reuters.com/article/economicNews/idINIndia-45809720100201

Bindas Bhai said...

India manufacturing rises; off-cycle rate move unlikely

http://in.reuters.com/article/businessNews/idINIndia-45811920100201

Bindas Bhai said...

Invest in A Grade office space now!!!
Minimum 25% increase in by June 10.

Bindas Bhai

Anonymous said...

Bindas Bhai will THE VICTIM of the above paid news

Bindas Bhai said...

Anon 11:13

Grow up and don't get personal. We all are here to understand the dynamics and not here to mud sling each other.

Democracy is worth only if the opposition is strong.

Bindas Bhai

Anonymous said...

Sundaas Bhai,

Ye dynamics kya hota hai? Kiska Dynamics hota hai?

DLF is the worst investment out there in the investment space. Some noted experts have said (and look at the PE of the sensex its above 20!!) that the markets are going to tank! But here comes sundaas bhai in all his smelly and creamy shitty opinion saying equity is the right place to be!!!!!

and you know what? if you want to be in equity be in DLF!!!!!!!! Kya Kala, badbu sundaas hai tu???

shailesh said...

Sounds very similar to India little bit.

Chanos On Chinese Overheating And Overindulgence

Anonymous said...

Sundasbhai is just obsessed with sundas. Please talk beyond shit Mr. Sundas Bhai

Anonymous said...

Please moderators,
Check the language and delete useless and insulting comments and keep the dignity of this blog.

rajni sharma said...

Hey this is really very nice post...
Nd one of your best post...Thanks
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