Sep 25, 2008|
Interest rates, realty and more...
Benign interest rates ahead?
The newly elected governor of the Reserve Bank of India, Dr. Subbarao will be putting forth the half-yearly review of monetary policy on the 24th of next month. While much has been written and said about the new governor's cautious stance on inflation-reigning measures there are conflicting views about the central bank's longer term casting of interest rates. Goldman Sachs believes that interest rates in India are set to cool off with inflation levels nearing single digits in the coming months. However, one of the largest private sector banks in the country, HDFC Bank sees long term interest rates rising even further.
While the world makes a mockery of the US that is struggling with debt levels estimated to cross US$ 11 trillion, we are ignoring the fact that back home the government borrowing levels are not looking too pleasant either. The Reserve Bank of India (RBI) has been regularly making funds available to banks in the past two weeks to boost the availability of funds. However, as capital flows to emerging markets shrink amid a global credit crunch, the same is expected to unwind.
Realty strikes hard
Nearly 112 m square feet of retail space is expected to be delivered in the next 2 to 3 years signaling sufficient supply of real estate space. But are there enough takers? As per a report from a leading business daily, the total vacancy rate in Mumbai malls stood at 13.1% in August 2008, the highest since 2005. In fact, the vacancy was as high as 30% to 50% in some suburban malls. Vacancy at Delhi's prime and suburban markets also rose to 16.2% and 10.8% respectively in the first quarter of FY09.
Real estate companies are waking up to deal with the slowdown. Hit by falling fund-raising avenues and demand from customers, construction companies are in the process of increasing the variable pay packages for a large chunk of their employees, as a measure to counter a prolonged slowdown. This is expected to help them keep their fixed costs under control. While most companies of this genre are yet shying away from downsizing their employee base, they are certainly wary of controlling the employee costs.
Mr. Market will have his way...Also read - Mr. Market and You
…believes the author of one of the largest circulated daily newsletters in the world - 'The Daily Reckoning' - Mr. Bill Bonner. Mr. Bonner finds former US President Ronald Reagan's famous line - "I'm from the government and I'm here to help" rather contemptuous and believes that Mr. Market always has something to say about what things are worth, irrespective of what he is dumped with. While the US government may be wanting to save its face by banning short-selling on financial stocks, nationalising major companies and buying a trillion dollar worth of Wall Street's losses, Mr. Market may not really be pleased. After all, he was not when the Japanese tried almost all these measures during the 1990s and still witnessed their economy sink.
More Views on News
Jun 10, 2017
Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.
Aug 17, 2017
PersonalFN simplifies the mutual fund account statement for you.
Aug 17, 2017
A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.
Aug 17, 2017
Mr Trump is in the White House and the gods are in their heavens; what's not to like?
Aug 16, 2017
All across the country, the old gods become devils. New, gluten-free gods take their places...
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 4, 2017
The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407