Property prices set to rise

Property prices in India which have been on the decline for several months on account of the credit crunch, are set to rise, according to Mr R.R. Nair, Director and Chief Executive, LIC Housing Finance Ltd.

“People cannot expect a further fall in property prices. That stage is over. Builders had lowered prices when they were in trouble in the last few months. For builders, the liquidity position has eased and the cash flows have improved. They have also cleared off existing inventories. Therefore, there is no reason for them to lower prices,” he said.

As the demand picks up, property prices will go up. This could happen in the next five-six months, Mr Nair, head of the second largest housing finance company in India, said.

“By how much the price will increase, will depend on the builders. In some pockets, they have started quietly increasing prices. However, it has not happened universally,” Mr Nair said in an interview to Business Line.

Moreover, builders had not increased prices in the last 15-18 months. Because of all this, there is a “good possibility’ that property prices will rise, he said.

Citing reasons for renewed housing demand, Mr Nair said that with a stable government in place, people feel that the economy will improve, the liquidity situation would be better and the soft interest regime will continue. They also feel that property prices have bottomed out. This is precisely why there is a renewed interest in buying homes, he said.

The property prices had seen a correction in the last two quarters as demand for housing had dried up. Builders had been forced to lower prices as they were sitting on a large inventory. Some builders who had planned luxury projects had converted to standard projects.

“With the economy looking up, there is confidence among builders that they can raise funds either through loans or through equity or QIPs. That is why builders have regained enthusiasm and started working on the projects”, he said.

Growth pick-up

 

 

The housing finance company has seen growth pick up from end- February. In March, the company had a 42-per cent growth. For April and May put together, there was a 120 per cent growth in approvals and a 50 per cent growth in disbursements.

Most of the growth for LIC Housing Finance has come from retail finance, Mr Nair said.

The company has revised its business growth target upward from the 25 per cent it set for itself at the beginning of this fiscal.

“With the first two months of this fiscal registering a 50-per cent growth in disbursements, the growth should be in the range of 30-40 per cent this fiscal”, Mr Nair said.

A Long Way to Inflation

Most of the media seem to have interpreted today’s lower-than-expected increase in the producer price index as good news. I’m not so sure. If you were worried that 5% inflation was just around the corner, then naturally you will have felt relief. Personally, I was more worried about deflation, and I still am. The inflation risk, if it exists at all, is in the distant future, and you could even argue that deflation in the short run increases the risk of high inflation in the long run. It’s hard for me to see how falling prices today are good news at all. And prices – excluding food and energy – did fall in May according to the PPI.

You might worry about energy and commodity prices feeding through to the broader price level. I’m worried about that too, but not in the way you might think. Undoubtedly some of that feed-through is already happening, and it hasn’t been enough to keep core producer price growth on the positive side of zero. I’m worried about what happens when commodity prices (1) stop rising (which they must do eventually) and/or (2) start falling again (which they may well do if the recent increases have been driven largely by unsustainable forces such as stockpiling by China). If core prices are already falling, and only energy prices are keeping the overall PPI inflation rate positive, what happens when energy prices stop rising?

What worries me particularly is that about 70% of the costs of production go to labor, and the forces of deflation work very slowly in the labor market. The data that are coming out today are only the tip of the iceberg. We’re already seeing evidence of the loss of upward inertia in compensation. Wage growth is decelerating, and, based on all historical experience, the deceleration is likely to continue – in this case, to continue to the point where it becomes deflationary.

I’m not talking about what will happen in the next 6 months; I’m talking about what will happen over the next 5 years. “Green shoots” – however green they may be – do not presage an imminent end to deflationary wage pressure. And they certainly don’t presage the beginning of inflationary wage pressure. Consider everything that has to happen before the wage pressure reverses and becomes inflationary:

1. Output must stabilize.
2. Output must start growing.
3. Output must grow faster than trend productivity.
4. Firms must slow layoffs to the normal rate.
5. Firms must remobilize slack full-time employees (workers who are still on the full-time payroll but aren’t being asked to produce much, because businesses have been trying to reduce inventories).
6. Firms must bring part-time employees back to full time. (This recession in particular has been characterized by the tendency to reduce hours rather than laying off employees.)
7. Hiring (which has been falling rapidly) must stabilize.
8. Hiring must rise to the point where it equals the normal rate of layoffs, to get total employment to start rising.
9. Hiring must become rapid enough that employment starts to grow faster than the population.
10. Hiring must become rapid enough that employment growth is faster than the sum of the population growth & labor force re-entry. In other words, net hiring has to be fast enough to absorb all the workers who will start looking for jobs again once there are more jobs around to look for.
11. The unemployment rate must start declining.
12. The unemployment rate must decline by 4 or more percentage points, which, by historical experience, will take a matter of years.
13. Firms must start competing for labor.
14. Firms must start raising wages.
15. Firms must raise wages faster than trend productivity growth.

Maybe – just maybe – we have already reached step 1. Step 2 may be just around the corner. There is no evidence thus far that we are approaching step 3. As for steps 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, and 15……that show may come to town eventually, but…I don’t see much need to start reserving tickets in advance.

Will Suzlon Lose All The Gains Of The Last Three Months?

By Maverick

Do investors have any bubbles left in them? How About Wind Energy?

  

You Bet. It is Alternate Energy…take away tax benefits off Wind Farms and what you leave behind are Steel Pillars adorned with Steel Blades, rotors and turbines waiting for the next gust of wind to come..to produce unstable, non peak load and the most expensive energy on Earth. This is the Bubble that investors have to be the most cautious about, and naturally the best short is Suzlon.

In the days of free and easy money, under the leadership of Federal Reserve chief Alan Greenspan (once dubbed the ‘Maestro’, though strangely enough, not any more), investment became a big game of ‘spot the next bubble’.

With hindsight, investing was easy. You just had to ignore things like fundamentals and rationality, and buy whatever everyone else was buying. Trouble was, you also had to avoid being the ‘greatest fool’, and bail out before the bubble popped. Lots of people didn’t, hence the current pain being caused by the property slump.

Losing money in bubbles is painful and teaches a hard lesson. We’ve had two in less than a decade – the tech bubble and then the property bubble. Surely it would be difficult to take investors for a ride again?

Certainly it would be difficult. But not impossible…

 

Investors do learn from bubbles…

James Montier at Societe Generale is a specialist in ‘behavioural finance’. This basically takes psychology and applies it to the field of investment and economics.

As someone who’s studied psychology in the past, I’d be the first to admit that it’s a pretty ‘soft’ science compared to something like physics, for example. But compared to the pseudo-science that passes for economics, it’s positively respectable.

And given that markets are anything but rational (even the Chartered Financial Analyst Institute admits that most of its members have lost faith in the ‘efficient markets hypothesis’), it makes a lot of sense to take investors’ all-too-human characteristics into account when trying to figure out what markets might do next.

In a recent research note, Montier took a look at the psychology of bubbles. As suggested earlier, you’d think that investors would learn. If they’d seen one bubble, they’d be more careful in future.

And in fact, they do learn. An experiment conducted by joint Nobel prize winner Vernon Smith used an investment game where investors could trade a dividend-paying equity under four different random economic conditions, each of which would result in a different dividend payout.

In the first game, investors at first undervalue the equity, then massively overvalue it, creating a bubble which then deflates. Smith then got the same people back to play the game again. What happened? Well, says Montier, “far from learning from their experience in the first round, participants generally go on to create yet another bubble!” And when they were asked why, “the most common response was they thought they could get out before the top this time!”

However, when Smith asked the same players to play a third time, this time they’d learned. “You end up with a much tighter correlation between the market price and fundamental value,” says Montier.

So twice bitten, thrice shy, it seems. And you might therefore expect the current generation of investors to have learned from the two big bubbles of the past decade.

…but they can get sucked into creating them

But that’s not the end of the story. Smith found that there was a way to get experienced investors back into bubble mentality. How?

 

He cut the amount of stock available in half, and doubled the amount of cash in the game, “effectively creating what might be termed a massive liquidity surge.” This time around, even the experienced investors were sucked back into creating another bubble, although it peaked earlier than the previous ones.

“A massive liquidity surge” is exactly what the world’s central banks are trying to create just now. Montier says he has no idea if it will be large enough to “reignite a bubble (and of course another crash afterwards).” But as US fund manager Jeremy Grantham of GMO has pointed out previously, we’re currently seeing “the greatest monetary and fiscal stimulus by far in US history”. So if that doesn’t do it, arguably nothing will.

The next big investment bubble

We’re not sure that investors have another bubble in them just yet. But with all that money floating around, it’s eventually going to go somewhere.

 

And one area stands out as a prime candidate – alternative and renewable energy.

The sector has the heavy backing of the government. It has some great stories behind it – solar towers, wave farms and electric cars – all linked together by smart grids, already being hyped as “the energy internet”.

There’s also a genuine infrastructure problem to solve. The laying of internet cables and railway lines bankrupted many people and companies. But those bubbles created the infrastructure necessary to improve our lives and increase productivity and efficiency.

 

Alternative energy has a similar driving force behind it. Regardless of your take on the greenhouse effect, you can’t deny that it would be useful to reduce our dependence on oil.

So the conditions are ripe in the alternative energy sector for a bubble.

Entry load waiver: Investors get to bargain-hunt

Investors can look forward to lower costs on their mutual fund purchases and greater bargaining power with their advisors, after SEBI’s Thursday move to do away with entry loads charged by fund houses for their open-end schemes.

MFs currently levy a uniform 2.5 per cent entry load (on the prevailing NAV) on all equity funds sold to retail investors.

This entry load is usually passed on by the fund house, almost in its entirety, to the distributor who marketed the fund, be it an individual financial planner, distribution house, online portal or brokerage house. The entry load effectively reduces the initial investment a person makes in a fund.

For every Rs 100 invested, only Rs.97.5 would actually be deployed, with the rest pocketed by the distributor.

More choice

 

 

With no entry loads, it will now be up to the distributor to levy a separate (and transparent) commission for the services he renders to his clients.

Distributors will be free to compete with each other, offering lower commissions to lure investors into their fold.

An investor will have greater choice — either hunt for a bargain if he doesn’t need advice, or pay a higher commission if he values the quality of advice given.

Currently, neither of the parties had this flexibility, as entry loads of 2.5 per cent are “bundled” into every equity fund (debt funds usually charge no entry loads) bought through an agent.

Competition may trim costs

 

 

Having said this, will the entry load waiver actually reduce costs for investors, given that a commission still has to be paid? Much will depend on how intermediaries actually react to this move. If all of them decide to retain commissions at 2.5 per cent for every equity fund purchase, investors may not have much of a choice in the matter.

However, two factors may actually help in bringing down costs for investors over the medium-term. One, the mutual fund distribution industry is fragmented and made up of many participants — ranging from banks and financial services firms (such as Bajaj Capital and Birla Sun Life Distribution), to the many individual financial advisors. Online stock trading portals also offer facilities for transacting in mutual fund units. Given this backdrop, there is healthy competition between participants to ramp up volumes; that makes it quite likely that one or more of the participants will eventually offer lower fees, as a key differentiator.

The deep cuts in brokerage charged on stock market transactions over the past three years, is evidence enough of this. Two, as SEBI has already waived entry loads for direct walk-ins and purchases by investors in mutual fund schemes last year, investors do have the choice of completely circumventing the distributor to purchase MF units. That too may keep up pressure on distributor commissions, trimming costs for investors.

India Inc investment bails out US companies

This is according to a report released by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Ernst and Young titled ‘India Contributes to Employment, Capital Growth and Tax Revenues in the US: Direct Investments by Indian Companies in 2007-09’.

However, as the US moves towards a stringent policy of granting H-1B visas, India Inc’s appetite for investing in the US will be affected.

Speaking at the official release of the report on Thursday, Dr Amit Mitra, Secretary-General, FICCI, said: “Indian investments are critical at a time when the US is moving towards a policy of protectionism.” According to him, small and medium enterprises of India are saving US companies that are closing down.

Mr Nico Derksen, National Coordinator, Outbound Tax Advisory Services, Ernst & Young, said, “There’s a growing acceptance in the US regarding companies buying US firms.”

He added that Indian acquisitions were also preferred because they bring in fewer management changes. However, the fact that H-1B visas have gone down from 1,95,000 during the George Bush administration to 65,000 currently is a cause of concern.

Furthermore, Dr Mitra said that the controversy about H-1B visas being granted to India has been “blown out of proportion”.

In addition to the release of the report in India, FICCI will also be taking 12 parliamentarians to the US to meet the US Secretary of State, the Secretary of Commerce and other top politicians in US Congress to discuss economic issues with regard to outsourcing.

The FICCI forum of parliamentarians will meet professors from Yale and Harvard universities before going to Washington D.C. The forum will also present the FICCI-Ernst & Young report to the dignitaries they meet in the US.

According to the report, in the financial years 2007-08 and 2008-09, Indian companies made 143 acquisitions across various sectors in the US. The report was made on the basis of public records and according to the values of the deals that were disclosed. India Inc has had deals worth $5,392 million during the financial years 2007-08 and 2008-09.

Handling Insult …. the Buddha way

One day Buddha was walking through a village. A very angry and rude young man came up and began insulting him. “You have no right teaching others,” he shouted. “You are as stupid as everyone else. You are nothing but a fake.”

Buddha was not upset by these insults. Instead he asked the young man “Tell me, if you buy a gift for someone, and that person does not take it, to whom does the gift belong?”

The man was surprised to be asked such a strange question and answered, “It would belong to me, because I bought the gift.”

The Buddha smiled and said, “That is correct. And it is exactly the same with your anger. If you become angry with me and I do not get insulted, then the anger falls back on you. You are then the only one who becomes unhappy, not me. All you have done is hurt yourself.”

“If you want to stop hurting yourself, you must get rid of your anger and become loving instead. When you hate others, you yourself become unhappy. But when you love others, everyone is happy.”

The young man listened closely to these wise words of the Buddha. “You are right, o Enlightened One, “he said. “Please teach me the path of love. I wish to become your follower.”

The Buddha answered kindly, “Of course. I teach anyone who truly wants to learn. Come with me.”

New virus alert !!

The Center for Disease Control has issued a medical alert about a highly contagious, potentially dangerous virus that is transmitted orally, by hand, and even electronically.  This virus is called Weekly Overload Recreational Killer (WORK).  If you receive WORK from your boss, any of your colleagues or anyone else via any means whatsoever – DO NOT TOUCH IT!!!  This virus will wipe out your private life entirely.  If you should come into contact with WORK you should immediately leave the premises.

Take two good friends to the nearest liquor store and purchase one or both of the antidotes - Work Isolating Neutralizer Extract (WINE) and Bothersome Employer Elimination Rebooter (BEER).  Take the antidote repeatedly until WORK has been completely eliminated from your system.

You should immediately forward this medical alert to five friends.  If you do not have five friends, you have already been infected and WORK is controlling your life.

Mobile number tracker (India)

TRAI (Telecom Regulatory Authority of India) directed all mobile operators in India not to disclose any mobile user’s details with any third party. And as result there will be no mobile directory available ever, just like the telephone directory. Even if you call up your mobile operator’s customer care and ask them about any no, they won’t disclose anything about that. But you can easily trace and find any mobile no in India via net.

Although this service can not tell you the exact location like the GPS tracking system, but will give you some important informations about the mobile no. You can track the mobile operator, state of residence etc. These sites use a statistics and mobile numbering plan to calculate the origin of a mobile no.

There are a lots of sites supporting this mobile no tracing feature. These sites can tell you the location of that mobile number, if that no is from India or not, if he is a GSM of GPRS user and the mobile network it’s using.

So, tracing and finding out any mobile no in India is not a headache anymore. Simply type the no, hit enter and get the details of your mobile no. Use this for information purposes only.

Following are the links:

http://trace.bharatiyamobile.com/

http://www.sindhunagar.com/TraceMobileLocation.php

http://www.informationmadness.com/cms/index.php?option=com_search_misscall&Itemid=124

Hope this will be useful to you…..

Exit polls suggest India heading for weak coalition…..

India could be heading for a weak coalition government on Thursday, with exit polls from the general election suggesting the ruling Congress-led coalition and its rivals would fall short of an outright majority. Three exit polls on Wednesday showed the ruling Congress-led coalition was slightly ahead of the opposition Hindu-nationalist alliance, but both groups were in need of smaller allies to gain a parliamentary majority. Official results will be released on Saturday. Such a scenario may leave little room for either group to manoeuvre on the economy, because a shaky coalition is seen as unlikely to push key reforms such as raising foreign investment limit in the insurance sector and privatisation. “But now that it is just a slender lead, the market may become uncomfortable and think there might be more of a mess in the offing.” After the last election in 2004, Indian markets tumbled on fears that an unstable coalition would soft-pedal on the next stage of reforms in Asia’s third-largest economy which striving to emerge as a major global player.

Taj Mahal… the real story.

No one has ever challenged it except Prof. P. N. Oak, who believes the whole world has been duped. In his book Taj Mahal: The True Story, Oak says The Taj Mahal is not Queen Mumtaz’s tomb but an ancient Hindu temple palace of Lord Shiva (then known as Tejo Mahalaya ) .

In the course of his research OAK discovered that the Shiva temple palace was usurped by Shah Jahan from then Maharaja of Jaipur, Jai Singh.

In his own court chronicle, Badshahnama, Shah Jahan admits that an exceptionally beautiful grand mansion in Agra was taken from Jai SIngh for Mumtaz’s burial . The ex-Maharaja of Jaipur still retains in his secret collection two orders from Shah Jahan for surrendering the Taj building. Using captured temples and mansions, as a burial place for Dead courtiers and royalty was a common practice among Muslim rulers. For example, Humayun,Akbar, Etmud-ud-Daula and Safdarjung are all buried in such mansions.

Oak’s inquiries began with the name of Taj Mahal. He says the term ” Mahal ” has never been used for a building in any Muslim countries from Afghanisthan to Algeria . “The unusual explanation that the term Taj Mahal derives from Mumtaz Mahal was illogical in atleast two respects.

Firstly, her name was never Mumtaz Mahal but Mumtaz-ul-Zamani,” he writes.

Secondly, one cannot omit the first three letters ‘Mum’ from a woman’s name to derive the remainder as the name for the building. “Taj Mahal, he claims, is a corrupt version of Tejo Mahalaya, or Lord Shiva’s Palace .

Oak also says the love story of Mumtaz and Shah Jahan is a fairy tale created by Court sycophants, blundering historians and sloppy archaeologists.

Not a Single royal chronicle of Shah Jahan’s time corroborates the love story.

Furthermore, Oak cites several documents suggesting the Taj Mahal predates Shah Jahan’s era, and was a temple dedicated to Shiva, worshipped by Rajputs of Agra city.

For example, Prof. Marvin Miller of New York took a Few Samples from the riverside doorway of the Taj. Carbon dating tests revealed that the door was 300 years older than Shah Jahan.

European traveler Johan Albert Mandelslo,who visited Agra in 1638 (only seven years after Mumtaz’s Death), describes the life of the city in his memoirs. But he makes no reference to the Taj Mahal being built.

The writings of Peter Mundy, an English visitor to Agra within a year of Mumtaz’s death, also suggest the Taj was a noteworthy building well before Shah Jahan’s time.

Prof. Oak points out a number of design and architectural inconsistencies that support the belief of the Taj Mahal being a typical Hindu temple Rather Than a mausoleum.

Many rooms in the Taj  Mahal have remained sealed Since Shah Jahan’s time and are still inaccessible to the public . Oak asserts they contain a headless statue of Lord Shiva and other objects commonly used for worship rituals in Hindu temples .

Fearing political Backlash, Indira Gandhi’s government tried to have Prof. Oak’s book Withdrawn from the bookstores, and threatened the Indian publisher of the first edition dire consequences . There is only one way to discredit or validate Oak’s research. The current government should open the sealed rooms of the Taj Mahal under U.N. supervision, and let international experts investigate.