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Tuesday, May 12, 2009
Building on benefits
Today, apart from the realtors who are under pressure to woo customers, there are buyers who are forcing developers to offer sops. About 800 people, who had booked flats in DLF's Garden City project in Chennai last year, formed an activist forum on Google Groups in February this year. The objective: to collectively negotiate with the builder on issues such as refund of deposits and scrutiny of the original title deed. Finally, DLF refunded the deposits of 200 buyers who had decided to exit the project. It also offered a discount to those who stayed on. Similarly, in Gurgaon, another set of 500 buyers on Yahoo! Groups managed discounts from the same builder.
The combined impact of consumer activism and sectoral pressures is that a prospective buyer has an upper hand while negotiating for a property. "Overall, real estate prices have corrected by 25-40% over the past six months. With funds drying up from investors, speculators, private equity players and banks, realtors have realised that money is only available with the end-users who, in turn, are looking at value for their money," explains Anuj Puri, MD, Jones Lang LaSalle Meghraj.
The best deals are available in the case of new or semi-constructed projects. DLF, for instance, has cut prices by 30% for its upcoming project in Chennai. In central Delhi, the same builder has launched a scheme to sell each of the 1,400 flats (1,200 sq ft each) at Rs 54 lakh, half the price of similar properties in the same location.
Does this imply that prices might fall further in the near future? Most customers believe so, but the builders don't agree. "So far, the lack of demand has forced real estate companies to announce price cuts. I don't think there is any further scope for this," feels Rohtas Goel, CMD, Omaxe. Adds Puri: "In Gurgaon, property rates have dropped from Rs 6,500-7,000 per sq ft to Rs 3,250. The prices have now hit the 2005-year range and there is no possibilty for more reduction."
At the moment, however, the deal fever is reaching a peak. This is especially for those who have already booked flats in new schemes or are ready to take possession. Some firms are now giving indirect discounts of nearly 20%; one of them has announced a 5% cut on base price, an additional 10% rebate for timely payments, and a doubling of the compensation rate (from Rs 5 to Rs 10 per sq ft per month) if the project is delayed because of problems associated with the builder. "We have implemented price corrections on project basis. Different models were worked out in different cities," says Rajiv Talwar, executive director, DLF.
Similarly, the buyers who pay timely instalments to Omaxe are being offered 5-10% discount on future payments. Mont Vert is allowing existing tenants to buy the flat once the lease expires. The rent that has been paid over the past 11 months is considered to be the down payment and is deducted from the sale price. Unitech, Ansal Properties and Parsvnath, among others, require customers to pay only the initial booking amount during the development stages and the EMIs from the date of possession. In the interim period, the developers pay the EMIs.
Freebies have become the norm, rather than an exception. A smaller house free with a bigger one. A fully furnished house for the price of a bare one. A free car (Mercedes or BMW) along with the purchase of a villa. Free international holidays. The list goes on. What you get depends largely on your negotiation skills and level of patience. The desperation among realtors is so extreme that they would rather strike a deal now, at whatever price, than wait till day after tomorrow.
However, the caveat 'buyers' beware' still applies. This is because there are many realtors who insist on fooling the prospective purchaser. The 'zero EMI till possession' offer only implies that you will not pay the interest for that period. Once your EMIs start, they will be calculated on the original amount that you borrowed and you will have to repay the entire principal amount. Thus, what you save is only the interest for a few months, which may end up being lower than a straight discount of 10-20% from the builder.
Check out the free house that is being given along with a larger one. In some cases, the latter may be priced higher than the market rate. So, the freebie offered might come to a naught. In other cases, the free one-room-kitchen flat with a 2-BHK, or a 1-BHK with a 2.5/3-BHK flat offer may be misleading. While your main house may be located within the city, the free flat may be far away in the suburbs or in another city. When it comes to cars, the models that are being doled out have, or are going to be, phased out. So, you could end up being saddled with a white elephant that you can't use or re-sell.
It is important, therefore, to scrutinise the offers carefully before you home in on them.
via Money Today
Daily News Roundup - May 12 2009
Reliance Power Transmission (RPTL), Essar Power, L&T and JSW Energy are among the eight companies that have been selected to place price bids for three large power transmission projects worth Rs56.5bn. (ET)
The Delhi Development Authority announced a Rs7bn bailout package for cash-drained Emaar MGF, which is developing the Commonwealth Games Village (CGV) project. (BS)
JSW Steel plans to sell its plants in the US at a price lower than its acquisition cost to cut rising losses. (ET)
Tata Teleservices, Vodafone and Idea Cellular are expected to issue multi-year BPO contracts of ~Rs5bn in the next couple of months. (ET)
United Breweries to bottle and distribute Heineken brands in India; will get a one-time fee of Rs3bn. (ET)
ONGC to invest Rs60bn in new and existing fields in current fiscal to raise output. (ET)
Maruti to expand presence in diesel segment. (BL)
ONGC may see its natural gas output almost double to 100mn cubic meter a day by 2015-16. (FE)
Maruti plans to focus on the rural market, to double its outlets in rural India from the present 231 to around 450 in the next two years. (BL)
GMR Infrastructure to raise up to Rs50bn through private placement of shares in domestic and international markets. (ET)
Maytas Infra is expected to achieve financial closure for the Hyderabad metro rail project in about three months. (BS)
Tatas-Srei JV may share passive infrastructure with two new operators Swan Telecom and S-Tel and targets to build over 30,000 towers by end of current fiscal. (ET)
RCom and Tata Teleservices have opposed a proposal to auction extra airwaves. (ET)
Bhel shelves plans of offshore oil rigs. (FE)
IOC likely to cut stake in Farsi gas and oil field in Iran as it faces financing pressure due to continuing losses on fuel sales. (FE)
GMR Energy, a subsidiary of GMR Infrastructure Ltd, is planning to set up a 2,000MW thermal power plant near a port on the west coast as it has already tied up coal supplies by acquiring a mine for US$100mn in Indonesia last year. (BS)
TCS likely to take a call on promotions at the end of Q1 FY10. (ET)
GMR Infrastructure will be issuing preferential equity shares to India Development Fund, the private equity arm of IDFC Infrastructure Fund. (BL)
Lupin has settled all patent litigation with US drug maker Wyeth for Effexor XR capsules; the US firm’s branded anti-depressant. (BS)
Bajaj Auto to ramp up production at Pantnagar. (BS)
Sri Lanka has assured to expedite the implementation of a NTPC’s 500mw imported coal-based power project at Trincomalee in Sri Lanka. (FE)
With a 24% increase in its wage bill, Coal India is looking for a price hike to protect its bottomline. (FE)
HMSI, the two-wheeler arm of the Japanese parent, has drafted an aggressive strategy for motorcycles that will also act as a key differentiator with its sibling, Hero Honda. (BL)
The Central Electricity Regulatory Commission has penalised Tamil Nadu Electricity Board, Karnataka Power Transmission Corporation and Rajasthan Rajya Vidyut Prasaran Nigam for grid indiscipline. (FE)
Bajaj Auto has launched new Pulsar model Pulsar 150 DTS-i and 180 DTS-i. (FE)
India’s apex consumer disputes panel rejects Satyam shareholder’s compensation plea of about Rs50bn. (ET)
Reliance Life Insurance reduced the number of agents by almost a third in H2 FY09. (BS)
Gujarat NRE Minerals Ltd (GNM), the Australian subsidiary of Gujarat NRE Coke Ltd, has secured a US$50mn long-term loan facility from a consortium led by Axis Bank. (BL)
Production at tyre giant MRF’s factories at Arakkonam and Puducherry, has been hit following a sit-in strike by around 3,000 workers. (BS)
Damodar Valley Corporation plans to raise Rs20bn from the debt market in order to fund the first phase of the proposed 500mw Bokaro project. (ET)
Loop Telecom, a subsidiary of Ruias-managed Loop Mobile (earlier BPL Mobile) announced the soft launch of cellular services in Tamil Nadu and Orissa circles. (ET)
LG Electronics India and Samsung India are in the process of creating new category of LCD TVs, called the light emitting diode (LED) TVs. (FE)
Rasna Pvt Ltd holding ~93% market share in the soft drink concentrate market in India, plans to enter the ready-to-drink segment. (FE)
Central Electricity Regulatory Commission is likely to notify the amended open access regulations this week, paving the way for the top power exchanges – IEX and PXIL – to launch long-term contracts. (ET)
The Government has deferred a decision on a proposal to impose provisional safeguard duty on hot rolled coils/sheets/strips as the matter needed to be examined further after taking views of the consuming industry. (BL)
Sebi has made it mandatory for companies seeking listing of corporate bonds and other debt instruments to maintain adequate security cover for them at all times. (BS)
The National Highways Authority of India (NHAI) has decided to cancel and re-invite bids for six projects, for which it had received single bids. (BL)
India could soon receive up to 2,500 tons of uranium from Kazakhstan as an agreement in this regard is set to be signed between the two sides by the month-end. (ET)
IRDA has rejected its pension counterpart’s proposal to involve insurers in the distribution of the New Pension System. (ET)
Pension fund regulator PFRDA will get to supervise pension plans offered by private insurers and mutual funds. (ET)
Animal farm…no bulls here!
There may come a time when the lion and the lamb will lie down together, but I am still betting on the lion.
The lions are unlikely to be separated from the lambs before Saturday. For now, most political parties appear like horses willing to be traded for the best price. The swines and its related flu can take a break from India. Don’t take big bets this week. Wait on the sidelines till there is clarity on the political outcome.
The recent bull dominance appears to be under temporary threat as players don’t want to take any chances ahead of the election results. Perhaps they are smarting from the May 2004 experience when the market had corrected after a surprise defeat for the NDA.
Traded volume was low on Monday and may remain so this week. Overall, the market will be choppy and rangebound.
Besides uncertainty over Government formation, one must also ponder over another big question i.e. how long will the new regime last? What’s worse, the long election process has left a sluggish economy without leadership at a critical juncture.
IIP for April and the FY09 will be out today and is not expected to show any big improvement.
Talking of the economy, the turnaround may take longer than anticipated. Economic activity may remain sluggish for a while before rebounding decisively. Even after the bounce back, the unwinding of the large stimulus will have its own set of issues like inflation, ballooning deficits, etc around the globe. Back home, we will have to contend with yawning deficits, precarious public finances and of course budget. Conjecture over monsoon may also have a bearing.
Asian Paints, Hinduja Ventures, JB Chemicals and Kotak Mahindra Bank will announce their results today.
FIIs were net buyers in the cash segment on Monday at Rs798.8mn while the local institutions pulled out Rs173.1mn. In the F&O segment, the foreign funds were net buyers at Rs1.03bn. On Friday, the foreign funds were net buyers at Rs12.41bn in the cash segment. Mutual Funds were net sellers at Rs714mn in the cash segment on the same day.
US stocks declined on Monday after hitting four-month highs last week, as major banks said they would sell shares to repay government funds and General Motors (GM) moved closer to bankruptcy.
The Dow Jones Industrial Average fell 155.88 points, or 1.82%, to 8418.77, the biggest drop for the blue-chip index since April 20. The broad Standard & Poor's 500 fell 19.99, or 2.15%, to 909.24. The technology-oriented Nasdaq Composite fell 7.76, or 0.45%, to 1731.24.
US stocks have been rallying since hitting multi-year lows in early March. The Dow and S&P 500 have risen for eight of the past nine weeks; the Nasdaq has risen for 9 in a row. In that time the Dow gained 31% and the S&P 500 and Nasdaq gained 37%.
Bank shares slipped, with the KBW Bank sector index losing 7.1%. Last week, the government revealed that 10 of the 19 banks that had been part of the stress tests would need to raise a collective $75 billion to be strong enough to withstand a potentially deeper recession.
Wells Fargo and Morgan Stanley, two of the 10 banks needing capital, sold billions in stock just one day after the stress test announcements. Bank of America also registered Friday to sell 1.25 billion shares, which the company said will yield around $11 billion.
On Monday, US Bancorp, Capital One Financial, BB&T and KeyCorp all announced plans to issue stock, with the intention of paying back the money their received under the government's bank bailout plan. KeyCorp was one of the 10 banks that was told to raise more capital as a result of the stress tests. The other three were not.
ADRs of global bank HSBC fell 2.5%. The bank said its US consumer-finance operation saw a slight slowdown in the deterioration of its mortgage loans in the first quarter, but warned improvements in the US mortgage market may be a seasonal blip.
Troubled insurer AIG is selling its Japanese headquarters to Nippon Life Insurance for $1.2 billion, in its latest undertaking to pay back a massive government loan. AIG shares fell 5.5%.
Morgan Stanley shares fell 7.6% after Japanese bank Mitsubishi UFJ Financial Group increased its stake to over 20% by buying 25 million shares at $24 each.
GM shares dropped 11% after CEO Fritz Henderson repeated earlier comments that a bankruptcy filing is "probable." Analysts said a bankruptcy filing is all but inevitable as the auto giant faces tough propositions such as persuading bondholders to swap $27 billion in debt for 10% of its risky stock.
Ford Motor shares were also down. After the close, the carmaker said it planned a 300-million-share follow-on sale of common stock as it seeks to rebuild funds for health-care benefits.
US President Barack Obama said that he has secured the commitment of a number of industry groups to cut health care costs by $2 trillion over the next decade. And the administration's top antitrust official said Obama will take a more aggressive approach to cracking down on monopolies than did his predecessor.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.17% from 3.28% on Friday.
Lending rates continued to fall. The three-month Libor rate fell to an all-time low of 0.92% from 0.94% on Friday. The overnight Libor rate held steady at 0.23%. Libor is a bank lending rate.
In currency trading, the dollar rose versus the euro and fell against the yen.
US light crude oil for June delivery fell 13 cents to settle at $58.50 a barrel on the New York Mercantile Exchange.
COMEX gold for June delivery fell $1.40 to settle at $913.50 an ounce.
European shares also lost ground. The pan-European Dow Jones Stoxx 600 index declined 1.4% to 206.59, having gained ground in six of the prior eight trading sessions. The index rose almost 5% last week, marking the eighth time it has posted weekly gains in the last nine weeks.
On a regional level, the French CAC-40 index fell 1.9% to 3,248.67, Germany's DAX 30 index lost 1% to 4,866.91 and the UK's FTSE 100 index slipped 0.6% to 4,435.50.
Markets started off the week on a negative note with the NSE Nifty breaking below the key support levels. 3,610-3,600 were the strong support for Nifty.
Firm cues from the US and Asian markets lifted the key indices to open in the green. However, markets were unable to hold on to their gains as all round selling pressure dragged the benchmark indices to extend losses to second straight trading session.
The BSE Sensex slipped 193 points to close at 11,682 and the NSE Nifty fell 66 points to close at 3,554.
Among the 30-components of Sensex, 24 ended in the negative terrain and 6 ended in the green. Top losers were DLF, SBI, JP Associates, RCom, Tata Steel and Tata Motors.
Bucking the negative trend were, M&M, ICICI Bank, Sun Pharma and Maruti.
Shares of Orchid Chemical have declined by over 7% to Rs101. The company announced that it received USFDA nod for Sumatriptan tablets. The scrip touched an intra-day high of Rs112 and a low of Rs99 and recorded volumes of over 0.7mn shares on BSE.
Shares of JSW Steel surged by 3.3% to Rs423 after the company announced that its April crude steel production grew 60%. The scrip touched an intra-day high of Rs432 and a low of Rs398 and recorded volumes of over 2.6mn shares on BSE.
Shared of Tata Steel slipped by 4% to Rs271 after reports stated that the Corus unit in UK is on verge of closure. The scrip touched an intra-day high of Rs289 and a low of Rs268 and recorded volumes of over 5.9mn shares on BSE.
Shares of Aurobindo Pharma gained by 6% to Rs297 after the company announced that it received approval from TGA Australia for Simvastatin tablets. The scrip touched an intra-day high of Rs303 and a low of Rs277 and recorded volumes of over 0.2mn shares on BSE.
Shares of Gujarat NRE advanced by 3.7% to Rs31 after the company’s unit signed US$50mn long term loan facility. The scrip touched an intra-day high of Rs32 and a low of Rs29.6 and recorded volumes of over 11.7mn shares on BSE.
Indian market may continue its downward trend. Key support for the Nifty is around 3,450 levels. Also uncertainty over the outcome of elections would continue to keep the traders and investors on tenterhooks.
US markets end lower
US stocks fell on Monday as investors locked in gains from a hefty multi-week rally and braced for new economic data.
The Dow Jones Industrial average declined 155.88 points, or 1.82%, to settle at 8,418.7.
The Standard & Poor`s 500 index dropped 19.99 points, or 2.15%, to end at 909.24.
The NASDAQ Composite index decreased 7.76 points, or 0.45%, to close at 1,731.24.
Majority of Indian ADRs ended on a negative note barring Patni Computer Systems.
Bullion metals turn little pale
Precious metals drop due to strong dollar
Precious metals ended lower on Monday, 11 May, 2009 at Comex. Prices fell today after registering gains last week. Prices fell today due to the relatively strong dollar.
Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.
On Monday, Comex Gold for June delivery lost $1.4 (0.2%) to close at $913.5 an ounce on the New York Mercantile Exchange. Last week, gold ended higher by 3%. Year to date, gold prices are higher by 3.4%.
For the month of April, gold lost 3.7%, the second consecutive monthly drop. For the month of March, gold fell 2.1%, down for the first month in five. But the metal gained 4.3% in the first quarter. Before March, for the month of February, gold ended higher by 7.4%. For January, 2009, gold had gained 3.9%.
On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (15%) since then.
On Monday, Comex silver futures for July delivery lost 4.5 cents (0.3%) at $13.91 an ounce. Year to date, silver has climbed 17.4% this year. For 2008, silver had lost 24%.
In the currency market on Monday, the greenback regained some strength on Monday, and the dollar index, which weighs the strength of dollar against the basket of six other currencies was up 0.1% at $82.692.
In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.
Last year, the weakening dollar and higher global demand for raw materials had led to records for commodities including gold. Gold reached a record in March 2008 as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the last move, the Federal Reserve has cuts its target bank lending rate to 0.25% from 5.25% in September, 2007. The Fed did it in nine steps.
Prior to 2008, gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.
At the MCX, gold prices for June delivery closed higher by Rs 64 (0.44%) at Rs 14,570 per 10 grams. Prices rose to a high of Rs 14,613 per 10 grams and fell to a low of Rs 14,482 per 10 grams during the day's trading.
At the MCX, silver prices for May delivery closed Rs 80 (0.35%) higher at Rs 22,624/Kg. Prices opened at Rs 22,510/kg and rose to a high of Rs 22,740/Kg during the day's trading.
Offtopic - Fake IPL Names List
FIP- "*"
Calypso King - Chris Gayle
Castro - Fidel Edwards
Appam Chutiya- Sreeshanth
Lordie - Sourav Ganguly
Lord Almighty - Sourav Ganguly
Aila = Sachin Tendulkar
Little Monster - Sachin Tendulkar
Badasha Dildo - Shah Rukh Khan
Vinnie Dildo - Shah Rukh Khan
Little John - Ishanth Sharma
Style bhai - Murali Kartik
Mangal Pandey- L R Shukla
Prince Charles of Patiala - Yuvraj Singh
Bubblee Bantli - Preity Zinta
Bunty= Ness Wadia
Big Sister - Shilpa Shetty
Little Sister - Shamita Shetty
Deegrah Pathan - Irfan Pathan
Bhooka Naan - John Buchanan
Skipper - Brendon Mccullam
Phoren Babas - Brendon McCullum, John Buchanan
Gilli Danda - Ashok Dinda
Bangla Tiger - Mortaza
Junta Tormentor - Ajanta Mendis
Meera Bhai - Harbajan Singh
Ganji Hanger - Sanjay Bangar
Mr. Batlivala - Vijay Mallaya
Bevdaa - Jessie Ryder
Re-Peter - Kevin Peterson
Peter Ka Beta – Kevin Pietersen
RVR Singh - VRV Singh
Sandy Baddy Babe - Mandira Bedi
Dhakkan coach-Darren Lehmann
Lady Jaya = Mahela Jayawardene
Arnold Power = Ramesh Powar
Springbok = Charl Langeveldt
Ghati Baba = Rohit Sharma
Kishen Kanhaiya= Ravi Shastri
Sheikh of Tweak - Shane Warne
Sultan of Tweak - Shane Warne
Pedophile Priest - Adam Gilchrist
RDB - Ranadeb Bose
Shakespeare - Aakash Chopra
Sparrow / Parrott - Glenn McGrath
Very Very Special Friend Ram - VVS Laxman
Kaan Moolo - Ajit Agarkar
Former India fast bowler who will remain a former India fast bowler - Ajit Agarkar
Buddhiman Baba= Wriddhiman Saha
Sticky Something= Ricky Ponting
Dewar=Rahul Dravid
Big Mac= Mathew Hayden
Chhota Chetan= Cheteshwar Pujara
Panty Curry= Robin Uthapa
Chinnu Popli= Bharat Chipli/Sreevats Goswami
Chikna Pussy= David Hussey
Chirkut Teli= Viraat Kohli
Bubban= Arindam Ghosh
Darwaan of Patiala= Tom Moody
Vakil Saab= Kumar Sangakkara
Saala Slimeball = Lalit Modi
Cool Dude= Mahendra Singh Dhoni
Boy George= Joy Bhattacharya(KKR Team Director)
Bubblies= Kings IX Punjab
Dhakkans= Daccan Chargers
Rajpoots= Rajasthan Royals
Bevdaas Team - Bangalore Royal Challengers
Chatterjee Kaku= ?
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