Sunday, June 19, 2011

Pointers to a slowdown

The Economic Times had a couple of articles over the week which caught my eye. These certainly were pointers to a slowdown last time around. Lets have a look at them.

1. The ET had an article how many Real Estate agents had gone under and had shut shop. These folks had moved to other professions. The Real Estate Market was down in the dumps. Related to Realty 1 more transaction caught my eye.NCPA Apartments arguably the most prized address in Mumbai where people like Ratan Tata and Uday Kotak stay, a flat was sold for Rs 85000 per square feet.I remember very clearly that flats here had gone for as high as Rs 1.05 lakh a square foot a few years back. If a up market flat goes for 20 pc less, then that means other flats should be at least cheaper by 25 pc. The NCPA Apartment has a premium because hardly any flats come up for sale and to have Uday Kotak and Rata Tata as neighbors means one had arrived in life in Mumbai.

2. I have been bombarded by SmSes the last week by Realtor having property for sale.Signs of increasing desperation?

3. The RBI hikes mean for those who bought flats a 3 years back the repayment tenure has gone up from 20 years to close to 40 years. Now, banks calculate the working life of a person when factoring in EMIs. This means they will soon ask borrowers for part pre-payment.

4. Brokerage houses have started laying off people. This again is from the ET. During the last recession also layoff were maximum in the Brokerage Houses. Volumes have dried up in the stock market.

5. This latest Rate Hike is definitely not the last one coming. 10 year yields are already at 8.3 pc whereas 1 year T Bill is also at 8.30 pc which points to a situation of almost inverted yield curve. Typical long term T-Bills should get higher rates.

6. The Housing Market will hold up as long as builders have money to prop up assets for which there are no buyers. They can hold on to the artificially swollen property prices till they can finance their projects.

7. The Technical Indicators point out at the last supports between 5300-5330 after which may head to 4800. There is nothing much for the markets to rise and all rallies can be used a shorting opportunities.

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