Let us hear from experts - how Real Estate can screw Economy?

http://www.marketoracle.co.uk/Article32329.html

Please go through the above article. When I talk about the insanely high real estate prices in india, I have seen some of my colleagues/friends are not exactly happy. But I have my reasons. If you read the above article carefully, you would find why I am pinpointing Real Estate is the reason for our impending economic collapse..

Sadly, we have not yet started discussing that and we are pretending that Real Estate has nothing to do with economy.

God saves this country.

The real estate bubble is popping and real estate correction is nearing.

Are we stronger than China?

Are you kidding dude?

No! I am just telling how manipulated India markets are and how ignorant the general public is..Please go through this link and the see the expectations from BRIC's for coming 2012.
http://economictimes.indiatimes.com/news/international-business/bric-countries-growth-story-coming-to-an-end/articleshow/11285589.cms

What is interesting here is that the chart given in the article. Almost all the 4 charts are looking strikingly similar but if you observe China chart, it is different from others. In china the recovery post 2008 is not huge.  After 2008 (Lehmann Collapse), Chinese markets are not insanely up like India. During 2007 peaks chinese index and Indian index both touched highs of 6000 above. But now Chinese index is languishing at 2200 levels and we are at 4700 levels. What is the logic here?

My point is Chinese behaved maturely in handling the crisis. That did not exactly 'excites' their equity markets but they are better off in main stream economy. Now they can afford to cut interest rates in case of crisis. Remember their steps to cut the Real Estate prices and other activities.

We, in India danced to the tune of corporate mama's/mafia's and corporate brokers and did not handled the issue maturely and tried to appease the equity markets and see where we are...

Interesting Blogs to read - 3

If you are dealing in shares you should know about this guy...Anirudh Sethi

He talks rude...and generally gives target both sides like a typical analyst :). But we cannot ignore him. He is generally right at least 51% of his calls. In reality he is right more than that.

www.anirudhsethireport.com

He asks you to buy January Puts of 4000 Strike :)

Are we looking for a crash here? hmm..time will tell

Investors Selling has begin - Start Music

The much awaited Real Estate Correction has begun in India.

For the past few months I was waiting for this moment when the main stream media talks about the Real Estate correction. This has started. Economic Times has started with this article.
http://economictimes.indiatimes.com/markets/real-estate/realty-trends/jittery-investors-selling-flats-below-market-rate/articleshow/11275674.cms

Please go through it. It says Investors started selling flats much below the price builders quote.(make no mistake, still the investor is making profit). Now this early birds are smart I would say. Because soon the so-called investors would have to sell much below their purchase price.

Start Music.

The Party Begins.

Real Estate Bubble, Real Estate Correction, Real Estate Fraud, India

Banks and NPA Levels

Now again the corporate mafia and parasites are active and pitching for a CRR cut.

Even though Subbarao handled them beautifully last time, this time he may not be able to do that. But in my opinion a CRR cut of 50 points would not help the Indian Inc as the credit offtake itself reduces. Also no banker in right mind would throw good money on bad businesses.

 Also another possibility is that by relaxing the monetary policy, RBI may open the floodgates for inflation again.

Latest reports suggests that the bad loans are in increase in many banks. Now bankers are waiting for others to show their dirt before showing the dirt themselves.

See below an article which shows banks exposure to the f****d up sector Real Estate.

http://www.livemint.com/2011/12/25233659/Unlisted-real-estate-firms-pil.html

Something about my favourite punching bag - 4

http://www.livemint.com/2011/11/30231509/Is-price-correction-inevitable.html

Here is an interesting article about the fight to survival by RE sharks. It would be criminal to tell that they are fighting for survival. They are fighting to cling to to their exorbitant profit levels which hopefully won't last.

The article dwells deep into their strategies, options etc







real estate india, real estate correction, real estate bubble, real estate fraud

Something about my favourite punching bag - 3

Now hindustan times comes with some article about the impending correction.
http://epaper.hindustantimes.com/PUBLICATIONS/HT/HC/2011/12/21/ArticleHtmls/PROPERTY-PRICES-MAY-FALL-20-30-BY-MID-21122011001042.shtml?Mode=1

There is also murmurs about the inflation revisit in India. If it raises its head again it is good times for reality bears for we expect interest rates to be in the same levels for another 1 year atleast which would break the backbone of  sharks in Real Estate.

Something about my favourite punching bag - 2

If you think still Real Estate is a good bet please read this...


http://www.bloomberg.com/news/2011-12-19/sanya-home-bubble-pops-as-property-curbs-deflate-prices-in-china-s-hawaii.html




If you want some India specific news then please read this...


http://www.moneycontrol.com/news/business/india-realty-likely-to-seeto-365-bn-pe-exits2012_636775.html#toptag

A real estate correction in India is round the corner because of the real estate bubble.

Are we traitors?

There is an interesting article in the blog link given below.

They think they have a point when they say we are cheering the fall of our own economy. This is the common allegation we face when we talk/expect about the real estate crash. I would like to give point by point reply to their allegation.

1. By accusing this, they indirectly supports the real estate mafia which is wholly responsible for irrational price rise for housing.

2. Many of them, did not seems to know the basic cycles of economy that growth is cyclical. They only want economy to grow up without any correction. It is no wonder many of them only seen the boom. For somebody who started earning from 2000-2001 would not have seen a proper cycle.

3. Many of them who themselves bought real estate at exorbitant rates and now fearing for lose of wealth. If they bought for housing purpose, anyway they need not worry because in long term the asset will find its own value. If they had leveraged to see quick bucks, then SORRY. It depends on their holding power.

4. We are shouting for a correction, because we want to avoid a hard landing. They dont know the meaning of hard landing and soft landing. Probably they should ask a ordinary US citizen about what happened in US in 2008. US can afford and India cannot.

5. It is not that we want to buy apartments after see the crash. Whether we buy or not, we want our jobs to be safe and unaffected due to this mad rush for property.

6. We are merely saying like any other business, why not Real Estate guys also earn 10-20% profit. Anybody who supports them have any idea about their margin?

I am happy to reply any particular question you have in mind.

Real estate bubble will lead to Real estate correction. NOBODY CAN STOP THE NATURE'S LAW.

Something about my favourite punching bag - 1

Real estate developers are getting finances from banks at 14%.  From private money lenders they are getting funds at 22% and more.

HDIL is neck deep in trouble. See the share prices. DLF debt is increasing alarmingly. Even though they cry and ask banks to bail them out, nowadays banks are wary about putting good money behind bad money as they also know about economic cycles. Banks turned cautious on Kingfisher is good example.

Another six months at same interest rates is enough to break the backbone of realty companies. Even if they succeed in getting a rate cut from RBI to the tune of 50 basis points, it wont be of any help to them.

What RBI must do today?

Given below an article from businessline which concurs my view on Indian economy. They say RBI should not budge in to the cries of corporate mafia and pimps and it should decision in the best interests of the Indian Economy.

Read the very informative and interesting article below...

http://www.thehindubusinessline.com/opinion/columns/s-s-tarapore/article2717776.ece?homepage=true

Time to rejoice -3

http://in.finance.yahoo.com/news/real-estate-prices-correct-now-030000562.html

I am trying to collect the number of articles talk about the imminent correction in RE sector. This above article in Yahoo talks clearly about the happenings.

Manufactured News - 1

Few days back, one fine evening (morning?!) US markets were rallying. The headlines in financial sites were screaming that US Jobless claims reduced to 8% from 10% dramatically. 

I surprised at the news. Because even for that week thousands of people applied for Jobless claims. How come a unemployment rate which hovers around 10% until yesterday suddenly came down to 8% that too people increasingly applied for jobless claims? It is pretty amazing story. My mind started dreaming about H1B. 

Then I dig deep into the news. Finally I found that that it is reported that  few Lakh people stopped searching for jobs, so by taking out their numbers they arrived at this figure of 8%. Beware guys. few Lakh people suddenly turned into entrepreneurs in United States in a week's time. Who says US is doomed? 

Jokes apart, the point is we should know how news are manufactured by these blood sucking investment bankers in the financial world.

When rain comes it pours - Time to rejoice - 2

http://www.latimes.com/business/la-fi-china-housing-bubble-20111213,0,3429813.story




1. RE can never go down
2. Demand is more
3. Middle Class is buying


Sounds familiar?!!!
These are the reasons attributed in China by mad investors and builders for selling/buying property.


Excerpts from the article:


Home prices nationwide declined in November for the third straight month, according to an index of values in 100 major cities compiled by the China Index Academy, an independent real estate firm. Average prices in the Shanghai area are down about 40% from their peak in mid-2009, to about $176,000 for a 1,000-square-foot home.

Interesting Blogs to read - 2

www.Indiahousingbubble.blogspot.com

This blog was created few years ago, by a poor soul who got pissed up after seeing the politician-corporator mafia jaking up the RE prices.

Very interesting articles. Especially I love to read the comments.

I knew this would happen - time to rejoice

http://www.dnaindia.com/mumbai/report_mumbai-developers-run-for-cover-cut-property-prices_1624999

It seems somebody is screwed up in Mumbai.  Time to celebrate.

I sincerely hope it spreads like a wild fire in India.

Corporate Parasites Stepping up Pressure to cut Rates

The coming 3 days will be very interesting as the corporate mafia and corporate parasites willl be stepping up the pressure on RBI relentlessly. It is the time for RBI to show some spine. But based on part history, I really doubt RBI would dare to do that.

Bankers are complaining their profit margins are reducing. So what? For the sake of country's economy  and to bring inflation under control, why not sacrifice some profits? If you believe in free economy then shall we open up everything? They also would know if we open up everything within a day our corporate sector will be blown off given the manner they operate.

Yesterday in a interview with MoneyControl Prime Minister's Advisory Panel Chief, Rangarajan clearly said, the dismal show by IIP data has not due to high interest rate alone. But the corporate parasites keep on asking about the rate cut.Corporate Mafia and Corporate parasites knew how to put pressure on govt and RBI and are doing that. They forgot in the process, they are doing harm to our economy in the long run

It is to be keep in mind that, already experts believe that during 2008 slowdown we have not handled things properly. Instead of putting things in order, we provide sops to corporate mafia which further boosts liquidity and property bubble and what not? We could have insist on some corporate governance etc but we did not.

We deserve what we get.

Europe Summit - A Huge Failure?

I am trying to analyse the failure of European summit happened last week in the backdrop of Indian stock markets.

On Friday after conclusion of summit European markets rallied up o 2%. And on Monday they have fallen up to 3%. This shows the blood sucking quality of market participants. Market does not bother except  what is in it for itself. Market is looking for cheap funds to punt.

People would be surprised to see that we have fallen irrespective of what happened in Europe. However, our fall is accelerated and will be accelerated with what is happening in Europe. With already falling exports bill, any problem for Europe would be a problem for India.

India's rupee is fast losing value and corporate mafia's pressure tactics to cut CRR or interest rates also would be difficult for RBI as adding liquidity for depreciating rupee will further affect Rupee.

If the fall is huge this week, just for the purpose of sentiment boost, RBI may be forced by government to cut CRR rates. But as per my understanding, it is not in the best interest of RBI and country to cut CRR unless we see a meaningful fall in the inflation rates. Atleast 4-5 is the reasonable inflation rate at which we should consider monetary easing.

Also a CRR cut would not help much in real terms. There is also a possibility that after this CRR cut  RBI may be forced to raise interest rate again either to control Rupee slide or Inflation. RBI needs to avoid such a situation.

Home Sales Fallin...

The much awaited happy news started to flow in....

http://www.business-standard.com/india/news/home-sales-drop-across-cities/458239/

We get what we deserve - Part 4 Final (Media and Greedy Investors)

In this series, I would like to write about the media's role in fanning the real estate bubble.

Easily the cheapest and silly media group of India is 'Times Group'. The have the most foolish people you ever see in their editorials and the guy (Arnab Goswami, who shouts 24*7  like a rat which lost its tail) in their channel is the best example for their standards.

Ever heard of media group owning real estate company?. That is times group for you.

And it is not rocket science to understand that you will only see positive news about the sector in their newspaper and unfortunately this is largest read newspaper in India. The less said the better about the media in India.  I remember one regional language author equates these media guys to pimps.

Investors also not helping to find the Real Estate Sector but I would not talk about them now and many of them are innocents and many got into this because of peer pressure. I remember few of my colleagues who got into housing loans 4 years back are still paying only the Interest and not even a fraction of principal amount has been paid due to raising interest rates.

I conclude this series and I would like to update my thoughts continuously about RE in this blog.

We get what we deserve - Part 3 (corporate bullying on RBI)

So far in India no meaningful debate started about the ill side effects of this real estate bubble. In this article we discuss about the role of corporates.


Personally, I don't think our corporates (barring a very few, may be handful) are as intelligent as we think. Everytime when RBI comes up with Interest rate hike one Mr. Deepak Parekh would come on TV and talk bullshit. Basically guys like him does not want RBI to raise rates. Because they think that will reduce their company profits and consequently it would have an effect on their take home salary. How selfish?


K.V Kamath is another guy who resents every time interest rate is raised. These guys fortunately  headed their respective organisations during boom period and only because of that considered as intelligents. How pathetic? Basic common sense says that growth should be organic and reasonable. To control inflation we need to compromise on growth. These men would not agree to this fact and the only reason that comes to my mind is selfishness.

Now RBI Governor is facing the music. Eventhough they knew the real reason they are unable to raise their voices against their bosses and they cannot withstand the pressure brought by the corporate mafia. Corporates talk about the ineffectiveness of RBI's policy on interest rates. Bull Shit. Why not corporates bat for regulation in Real Estate sector in the same way they are shouting for retail FDI?

We all know how the corporates are fudging their books in India. Satyam computer is best example. Even now, I have my doubts about ICICI bank's books. During 2008 slump it was rumoured that ICICI bank lost a lot in toxic sub prime assets ( Under K.V.Kamath). Nobody knows what is there in their books.

They are crying now that interest rate hike is affecting liquidity. But how come they are still showing 30% more profit every quarter than the previous quarter ? If that is true why crying?

In my view, RBI should stop listening to these mafia and go ahead with their rate hiking spree to control the inflation. If the liquidity is sucked out, automatically the money from RE sector will come out and common man can live happily.

These corporate mafia are rumour mongoring now by saying that the interest rate cycle has peaked out. They show the IIP data and GDP data to substantiate their claim. But in my opinion only inflation should be considered for any rate decisions. I remember during 1998-2000 we had higher interest rate than the prevailing interest rates.

We get what we deserve - Part 2 (Real Estate Bubble and Interest Rate)

When I say Indian government fanned, patronised and encouraged the bubble in Real Estate sector in India I mean it.

The intention of the government may be good that they want everybody to have own home, comfort living etc. So exactly for this reason, they encouraged everybody to go for housing loan and pressed banks to give housing loans. Government is also giving tax sops for those who service housing loans. Sounds good until this point. But what the governments forgot to do is some sort of regulation in this sector. Due to this reason, the rates climbed up hugely and the greedy builders/developers lobby made a killing and still trying to do that by looking bakras in Aam Aadmi log.

As written in previous article, government has successfully avoided problems during last down trend by giving sops to builders/developers. Even then that down trend gave much needed reality check to large builders. But still they managed quite efficiently and even now they maintain there is nothing wrong in real estate in India and they claim prices are going to go up only for ever.

Many of us forgot the fact that, interest rates are high now and there is no reason why it cannot continue to stay at this level for quite a period? Inflation is not relenting. Government is shamelessly waiting for the base effect to take over to show some moderation in inflation instead of seeing the real reason.

RBI has raised rate for 13 times without any meaningful outcome. RBI has to be candid in their observation. They should have come out openly and said that they wanted to drain out the liquidity in the market to bring down the inflation. Instead of that, they said they wanted to keep the growth and at the same time they also wanted to control the inflation. I wonder whether they forgot their lessons learned in degree classes:)

The system has learnt to live with their 0.25 percent REPO/REVERSE REPO increase and it has not done anything to the liquidity and the bubble continues to grow. Had they rised interest rates at the rate of 0.5% for three consecutive months that would have been a stern message and that would have give us a much needed relief in the inflation front.

However, now it seems RBI has woken up and trying to tighten the screws after seeing the slump. Still I think Bankers lack the backbone to tell their political bosses the truth. The truth is that Real Estate has to soften if you want inflation has to soften.

( In the next article, we will see Corporate Broker's influence)

We get what we deserve - Part I (Real Estate Bubble)

In the background of Euro crisis the question on everyone mind is what is in store for us for medium to long term. I feel medium term Indian economy is going to suffer and markets will fall huge. 

The long term growth story of India is intact. Everyone seems to be agree on this fact. However, the medium outlook is still blurry. The macro indicators tells that the picture is not as rosy as painted by our government and other analysts.

The main reason for all these malaise is the housing bubble fanned, patronised and encouraged by government itself. The bubble which started in early 2005-2006 has reached alarming proportions and now it is matter of time before it explodes on our face.

China finally understood that to develop their economy and to maintain their GDP growth they need to control their spiralling property (RE) prices. They are taking steps in the right direction. It is understood that they put some sort of restrictions on Real Estate sector and due to the measures RE prices are coming down there. Chinese inflation is also in the region of 4-5. Stock market is also not hugely over valued in China although still china grows over 8-9 percent.

On the other hand, India and its corrupt politicians does not acknowledge that the spiralling Real Estate causes such a sickening effect on inflation and economy. so far there was no meaningful discussion started in India about these menace.

Congress leaders ( It is rumoured that Priyanka Vadra has stake in DLF) has huge stake in RE. Almost all the leaders irrespective of parties have huge stake in RE. It is anybody's guess that all the black money of politicians are parked in real estate. This explains why the government is not ready to take on this sector to control the inflation.

During last down trend ( US Housing Collapse), India managed well because Interest rate was less and government could afford to provide sops to their real estate developers and inspite of huge fall in equities the RE sharks managed not to reduce the prices. One must agree to the fact that they have handled the situation very intelligently.

Unfortunately this time, it would be very difficult for them as Interest rates are at peak levels and I know clearly that government is in a fix.

  ( we will talk about the interest rate scenario and RBI dilemma in next post)

Great Blogs to follow

www.tradeinniftyonly.blogspot.com

The above mentioned blog has a very interesting and effective technique wherein the trend of the market is identified by some magic formula. It is rumoured that many guys made huge just by following this blog mechanically.

This blog follow the combination of EW analysis and moving averages. 

Basis of Assumptions

I trade based on the following Assumptions.

1. FII's are a force to reckon with. They can move the market in any direction by their money power.

2. Open Interest in Nifty Futures and Options can be used to identify the direction of the market to certain extent.

3.  I follow other blogs owned by EW analysis experts. I find EW analysis reasonable although it cannot be followed blindly.

4. Based on current economic scenario, I am bearish on Indian Market. So I may sound bullish only during over sold status and otherwise mostly I trade on short side. During uptrends,  I wait to short at high levels rather than going long. 

First Post

Welcome to my blog.

In this blog, I will be updating my views of Indian Economy in general and Indian Share Market in particular.  I am small time trader who trades primarily in Nifty options.

I also invest in good quality stocks.