I was just going through this headline in economictimes website "Stocks fall on US, China economic news" and I was wondering what is really happening in the world economy?

We see China posting slow growth (taunted to be the driver of world economy) USA still crawls, UK's debt mounting all the time and whatever our politicians say India is no better. Because I myself and my friends experience the difference of the present time and time we are flooded with offers in 2007. I can tell you one of my friend who has an experience of 5 years and working as a relationship manager is finding it very hard to even schedule a prospective interview for himself. And the hikes that are announced by most of the companies are only in paper's or in peanuts.

On the basis of current situation I'm actually wondering about two things about India.

1. The stock market keeps on rising - This increase is may be due to the fact that FII's are pouring in money. But china being a FII's darling has seen their stock market value coming down. But that does not seems to be the case with India. Is Indian stock market rising just because of FII's or Indian public is investing in stocks? Or Is India really immune?

2. Real Estate - I have heard and seen in most of Tamil Nadu that land prices have stagnated or have come down in a very few areas, but in most of the cities and towns the sellers are quoting those absurd prices with no takers, but still the sellers or hanging on to the price. Where it is all going to end? Will RE as whole (flats, land) survive this period or the imminent depression predicted by economists like Paul Krugman will sweep the world and India.

I would like to know your thoughts on it. I know there are people in this forum who say the RE is going to rise all the time and there people who say the RE will go down in short term. Let's see what we can get out of this thread?
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  • Originally Posted by sri_idea
    parliament seems to be suspended for price rise issue !!

    why... dont they know (like digvijay and wiseman) that we are having deflation soon ?


    Food inflation has come down to single digits :bab (4):
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  • Originally Posted by sridharchennai
    Food inflation has come down to single digits :bab (4):


    you mean we should be happy for that ? or that it is the sign of things to come ie. expect it to go below zero in august...
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  • Originally Posted by Digvijay
    And I see nothing cheap right now.


    Real Estate is not cheap in Mumbai (Anderi etc).

    It is not cheap in Chennai (Boat club road, Chetput, RA puram, Anna Nagar, Besant nagar etc).

    It is not cheap in Bangalore.

    It is not cheap in Hyderabad.

    But what the people are suggesting is Buy a piece of land in the upcoming area and keep it for 5 - 10 years... you will get good returns. You should have relatives or friends in the Tier II cities then you can buy there.

    You can buy near Salem, Trichy, Madurai, Kovai.

    Tirunelveli to Kovilpatti road - Gangaikondan, Kovilpatti are seen good number of land transactions.

    I bought few cents of land near Madurai.(RS 20K per cent in the year 2005). Now it is Rs 60K.

    Can you buy in Chennai for the above price ?

    It is better in Porur to Sriperumbuthur road.
    It is better in Tiruvallur to Sriperumbuthur road. Lots of houses built there..
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  • Originally Posted by sri_idea
    you mean we should be happy for that ? or that it is the sign of things to come ie. expect it to go below zero in august...


    sri_idea,

    Ours is a fiat currency based economy.Which means the value of our rupee is directly impacted by the deficit and debt of our government.

    In such a debt based economy, reduction and unavailability of credit is interpreted as deflationary.The reason why RBI is taking cautious baby steps in increasing interest rates is because they have to balance the inflation caused by the stimulus they announced and also ensure the growth is not impacted adversely when its withdrawn.

    Deficit pressure will ensure that stimulus will be withdrawn sooner or later.When supply of money goes down deflation is caused.

    Deflation doesnt mean reduction in prices always.It first results in reduction of production.If supply is less automatically price will go up.The price rise and inflation you are seeing now is primarily because of low supply, not excessive demand.

    Also, This week the food inflation has come down to single digits.That doesnt mean price is reducing.It only means it has risen by the single digit percentage.

    Hope this clarifies some of your doubts.
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  • Originally Posted by nabishek
    sri_idea,

    Ours is a fiat currency based economy.Which means the value of our rupee is directly impacted by the deficit and debt of our government.

    In such a debt based economy, reduction and unavailability of credit is interpreted as deflationary.The reason why RBI is taking cautious baby steps in increasing interest rates is because they have to balance the inflation caused by the stimulus they announced and also ensure the growth is not impacted adversely when its withdrawn.

    Deficit pressure will ensure that stimulus will be withdrawn sooner or later.When supply of money goes down deflation is caused.

    Deflation doesnt mean reduction in prices always.It first results in reduction of production.If supply is less automatically price will go up.The price rise and inflation you are seeing now is primarily because of low supply, not excessive demand.

    Also, This week the food inflation has come down to single digits.That doesnt mean price is reducing.It only means it has risen by the single digit percentage.

    Hope this clarifies some of your doubts.


    As long as one has Job.. no problem.. whether Rice costs RS 40 / kg or Tomoto costs RS 50 per kg or any other vegetable costs Rs 50 per KG.

    Food Inflation.

    Steel, cement and other metals inflation.

    Wage - inflation.

    If the US goes to double dip recession ... then we will know the impact. :(
    How many jobs will be saved :((
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  • nabishek

    thanks for some detailed explanation.

    i knew just about enough to figure out that 9% inflation means price rise. it was a poor attempt at being sarcastic...
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  • I don't own these predictions!

    Friends,

    Let me clarify a lot of things in a few words! :D

    Digvijay was talking about Bob Prechter (www.elliottwave.com) a longtime practitioner of his version of RN Elliott's wave theory. Besides Elliott, there are many wave theories like the Kondratieff's theory and so on. Basically, its human quest to finding out if there is a predictable pattern in the past which can be extrapolated into the future so that we can be better prepared. Nothing wrong in that since I also see the same kind of behavior when companies forecast their 2011 performance, which, investors don't have any problem believing (we believe what will support our pre-conceived notions).

    In short, many of the wave theories see their cyclic low-periods (or Winters) coinciding around the period post 2008 and all the way upto 2022. Prechter believes that we are seeing the end of a Grand Super Cycle that started around the time America was born. So, we will probably see a large reversal which (typically) reverses the entire rise of the previous cycle.

    According to Prechter (and most Wave theory proponents), we saw A wave from 14200 to 6400, B wave from 6400 to around 11200. We may have seen the top of B wave (Bear Market Rally) around 10 April and may have started the C wave. This is normally the most feared wave which is sharp, steep and longest, expected to break below 6400 and go down to between 3000 and 5500. The beauty of the EWT is that it not only forecasts price but also time so you know around when you can expect a reversal (critical for contrarians who do not want to get caught going contra too early!). His worst case target is 600 on the DOW sometime around June 2016! :)


    To cut this short, there are all kinds of opinions by some very savvy people on the Net. I read everything I can lay my hands on and over the last few years have come to some ranking of who to read regularly and who to read once-in-a-while.

    Most people do not like to see below when climbing because of fear. I prefer to figure out the worst case scenario and work myself into a position to avoid getting killed just in case it happens. Then I go about my life as usual. Please note that I'm able to accept the most fearful scenarios into my calculations and even make plans to use it as well as possible when it happens. At the same time I continue to go about my other money-making efforts without getting frozen.

    I request all you people who get fearful at the mention of the word recession/depression to face your fears, get over it (even plan on how to have plenty of cash when it happens) and not get frozen with indecision or fear.

    To sum up, Bob has the following predictions to his credit ...

    After the 1980 bear market, Bob predicted a multi-decade bull market. He has called the 2000 peak as the real peak for the Grand Super Cycle that started in the 1770s. Back in mid-2007 he called for a peak and asked people to go short ar S&P 1550 levels. Then in mid-Feb 2009 he called for the nd of the A leg and the start of an extraordinary bear market rally (mainly due to the stimulus) that could go as far as 11000 and asked people to cover their short positions around 700 and go long. Since Oct 2009 he has been on caution mode and in Feb 2010 he called for a top. This seems to have happened around 10 Apr 2010. As the stimulus is winding down, GDP growth is starting to vanish, the millions of jobs promised by Obama have never appeared and the US seems to be slipping back into the Great Recession which is likely to become a Depression and then a Great Depression.

    I think a guy (and his system) who has come up with so many important turning points should be given some respect, huh?

    In our markets, I keenly follow Vivek Patil who I consider the best EWT person (he follows another variant called the Neo Wave Theory). Have saved every one of his weekly posts since 2002 and he is now available to people who can login to ICICI Direct. There are other longtimers like Deepak Mohoni, but Vivek is the sharpest and clearest (even he gets fuzzy some times). If anyone knows others who are good or better, please let me know!

    As always, many times predictions go wrong because factors were not considered, or they changed or analysts simply did the wrong thing. But because some predictions are wrong, you don't throw the baby out with the bathwater!!!

    Thats all I had to say. I only read, digest, evaluate and, after seeing if predictions are starting to move correctly, put it into my posts. I don't exactly own them!!! :)

    And, yes. ALL went from 14 to 75 because of a sudden jump in quarterly profits. I didn't buy ALL at 14 because they are not a consistent performer (that way I'd have to buy every low stock in town hoping they will shoot up one day), and now that its gone to 76, I'll do an analysis of their performance to see if it is not just due to a one-time windfall and in case it really shows long-term promise, will wait for it to come down to really attractive levels to pick it up.

    Such stock movements have nothing to do with the longer term issues I'm discussing. And in fact, if we do see a global depression going forward, not only will this sudden jump in ALL profits vanish as quickly as it came, the stock too will reverse all of its gains. My analysis prevents me from jumping headlong into ALL at 76 and hold it all the way down to 15 again!!! Worth the while, I think.

    cheers
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  • To be honest, Nobody knows !

    Everyone is hoping for the best !!

    It is like siting on top of a Volcano, wishing it does not blow up, till I'm seated!!!
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  • Is the hike in visa fees going to affect the number people that Indian IT companies will be sending to USA?
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  • Originally Posted by sridharchennai
    Is the hike in visa fees going to affect the number people that Indian IT companies will be sending to USA?


    In my opinion, it won't. The margins will come down on onsite billing. However, in IT, the margins on very high when the work is delivered fromoffshore and typically companies push for 70:30 (offshore : onsite) ratio. Some companies go to the extent of 80:20.

    Also when you look at the figures in absolute terms, we are talking about 2000$ in select categories of H1 and L1 visas. When you compare this with the billing that IT companies charge (60-120 USD varies from skill set and company brand name etc), it will have very minimal dent.

    However, pure bodyshopping companies could take a hit.. Again..it is only 2000 USD..in over all scheme of things..
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  • Originally Posted by sridharchennai
    Is the hike in visa fees going to affect the number people that Indian IT companies will be sending to USA?


    It will effect the number of H1 and L1 visas being processed by large IT companies. Large IT companies are the usual suspects since they process these US immigrant visas for almost any employee who meets the visa criteria irrespective of any immediate need for onsite work. Thus creating a large bench of visa ready employees for future requirements. This was also a very good game plan to fight employee attrition for these companies as they can retain these employees for long time promising a pipeline of onsite work opportunities.

    Now with visa fee hike, large IT companies will stop bulk processing US immigrant visas, which means only a few visas will be processed based on immediate and absolute onsite requirement for which another visa ready employee is not available.

    This will actually have a big benefit to offshore India based employees. Since attrition will further rise among offshore India based employees thus increasing the salaries at offshore.
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  • Another important issue to be discussed is the salary hike given to MPs in parliament.

    Currently an MP actually gets a take home of Rs 45 Lakhs per annum (adding free benefits provided like business class air travel, first class ac train travel, government bungalows at posh locations etc). With the increase in salaries, according to Times of India MPs take home will increase to 67 Lakhs per annum. In an IT employee's language this is MP's CTC.

    Now when MPs get a hike, Bureaucrats & other Government Employees will not keep quiet, they will also soon strike asking for hikes.

    Finally it will come down to private sector employees (IT employees ) who will also strike asking for hikes.

    Thanks to Laloo and Mulayam Singh Yadavs, hope whole India gets good salary hikes.
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  • http://www.equitymaster.com/detail.asp?date=8/24/2010&story=4

    The FDI in India's real estate and housing market jumped almost 80 times or 8000% between 2005 and 2010. In FY05, the FDI in this sector was a mere Rs 1.7 bn. This has however increased exponentially to Rs 136 bn in FY10. In the past 10 years, cumulative FDI inflows into this sector totaled Rs 381 bn or US $8.5 bn. This makes it fourth on the list of FDI inflows in the past decade. What is surprising is that this sector did not even feature in the top ten list in the 15 year period post liberalisation from 1991-2006.

    Metros are where the money is. According to a leading business daily, the largest number of building projects where FDI is in action is in our very own financial capital, Mumbai. Of the 1,614 projects in which foreign investors have put in cash since 2005, 422 were cleared by the RBI's Mumbai office, followed by 316 in Delhi. Other large cities including Bangalore with 225 projects, Hyderabad with 105 projects and Chennai with 68 projects, also received foreign capital.

    In Mumbai over the past four years, according to data from Times Property, average real estate prices have shot up significantly. Cuffe Parade, Ghatkopar, Andheri (W), Vashi and Bandra (W) have seen hikes of 72%, 95%, 96%, 87% and 79% respectively. The largest FDI in the last five years however has been in the construction of a technology park at Bandra Kurla Complex (BKC) in Mumbai, totaling US$ 372 m. Rates of Bandra (E), where BKC is located have incidentally increased by 162% since August 2006.

    But, due to the huge boom in the property market across the country, FDIs are not confined to metros and big cities. Since 2005, real estate projects have been approved by RBI offices in Bhopal, Kanpur, Kochi, Jaipur and Panaji, amongst others.

    Offshore banking zone, Mauritius has contributed the maximum to FDI fund inflow to India, totaling 42% of total funds in the past decade.

    With new iconic structures such as World One by Lodha Developers and the planned hill city Lavasa, by HCC coming up, India's property market is expected to see more money from foreign investors. Initial public offerings by the developers are also an easy exit route for the foreign investors to cash in on their investments.

    For investors in real estate and home buyers, however, this may means paying a heavy premium. While buying a house to reside in may not be postponed, investments could certainly be more value driven.
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  • Originally Posted by REUser
    http://www.equitymaster.com/detail.asp?date=8/24/2010&story=4

    The FDI in India's real estate and housing market jumped almost 80 times or 8000% between 2005 and 2010. In FY05, the FDI in this sector was a mere Rs 1.7 bn. This has however increased exponentially to Rs 136 bn in FY10. In the past 10 years, cumulative FDI inflows into this sector totaled Rs 381 bn or US $8.5 bn. This makes it fourth on the list of FDI inflows in the past decade. What is surprising is that this sector did not even feature in the top ten list in the 15 year period post liberalisation from 1991-2006.

    Metros are where the money is. According to a leading business daily, the largest number of building projects where FDI is in action is in our very own financial capital, Mumbai. Of the 1,614 projects in which foreign investors have put in cash since 2005, 422 were cleared by the RBI's Mumbai office, followed by 316 in Delhi. Other large cities including Bangalore with 225 projects, Hyderabad with 105 projects and Chennai with 68 projects, also received foreign capital.

    In Mumbai over the past four years, according to data from Times Property, average real estate prices have shot up significantly. Cuffe Parade, Ghatkopar, Andheri (W), Vashi and Bandra (W) have seen hikes of 72%, 95%, 96%, 87% and 79% respectively. The largest FDI in the last five years however has been in the construction of a technology park at Bandra Kurla Complex (BKC) in Mumbai, totaling US$ 372 m. Rates of Bandra (E), where BKC is located have incidentally increased by 162% since August 2006.

    But, due to the huge boom in the property market across the country, FDIs are not confined to metros and big cities. Since 2005, real estate projects have been approved by RBI offices in Bhopal, Kanpur, Kochi, Jaipur and Panaji, amongst others.

    Offshore banking zone, Mauritius has contributed the maximum to FDI fund inflow to India, totaling 42% of total funds in the past decade.

    With new iconic structures such as World One by Lodha Developers and the planned hill city Lavasa, by HCC coming up, India's property market is expected to see more money from foreign investors. Initial public offerings by the developers are also an easy exit route for the foreign investors to cash in on their investments.

    For investors in real estate and home buyers, however, this may means paying a heavy premium. While buying a house to reside in may not be postponed, investments could certainly be more value driven.


    Hi REUser,

    I ;ive in a upcoming city called coimbatore in Tamil Nadu. Even here I see lots of apartments that have either slowed down the speed of construction or have completed construction without any takers.

    Same way there is mall called FUN CITY being developed by ZEE Group. After 2.5 years of construction (they haven't even constructed 50%) I hear that they are planning to sell the property and move out. Seems the companies are slowly getting the real situation.

    Thanks,
    Sridhar
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  • Chennai alone Tamil Nadu ?

    Chennai alone Tamil Nadu ?

    May be my plot (near Chennai) price may increase and my flat price also... But Chennai alone Tamil Nadu ??

    Metro Rail - RS 14,000 Crores
    Coovum Cleaing - RS 1200 Crores (Joke of this Century).
    Adyar Park - RS 100 Crores
    Koturpuram Library - Rs 100 Crores
    Chennai Airport expansion - Rs 2200 Crores
    Bridges
    Guindy Kathipara
    Airport bridge
    Padi
    Koyambedu
    Perambur
    Pallavaram
    Mogappair
    VyasarPadi.... etc etc.
    Greenfield Sriperumbuthur Airport - Multi Crore


    If the TN govt spends atleast Rs 1000 crores each for infrastructure development in Kovai, Madurai, Trichy, Nellai and Salem.... the migration to Chennai can be controlled.

    And the state govt is not willing to allot a Re for the Chennai Kanyakumari double line (Rail track).

    What a pity .......what a partiality ?
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