The markets are facing resistance to make an up move right from it failed to trade above 4600 level. The fall is good and can be considered as consolidation so long as it trades above 4416 or 4400 level. But the markets failed to live up to the expectations of the Bulls who committed positions as it could rallied up to 4650 level from 3800 level and the there was so much of relief from the crude front.
The internal, non negotiable challenge to the Govt. is maintaining growth with inflation under controle. The Govt. is willing to sacrifice growth but not the escalating inflation that could become very costly if it chooses to face early elections. The inflation numbers are at 12.63%, though the rate of growth is slow but high in numbers.
The top news: The Health care with Insurance-schemes- as mater of fact the real opening of sunrise sector with huge potential untapped. The N-deal will go through at NSG meeting- will benefit lot more industries as earlier discussed. The existing inflation numbers no longer suitable to reality sector and the auto sector. The situation can be favourably understood; monetary pressures likely to have eased out when the low of UNITECH becomes 181-83 and the high crosses 195 level.
The RCOM is also a GSM operator, existing GSM operators agreed to give interconnection, RCOM is good above 405-06 level and very good if it trades above 418-21 level. The important news could change the RIL & RNRL gas dispute is that the Ambani’s may meet at home to settle rather than in court.
The Nifty heavy weights are weak except RIL and Infy. The RIL will boost the Nifty if could trade above 2230 and may drag further if it trades below 2190 level. The ONGC need to bounce back to 1050 levels and shall cross the resistance at 1070.
The Nifty is likely to open due the negative sentiment of yesterday sell off and weak Asian markets. The Nifty loosing one support after one support and the numbers are drifting lower. The Nifty will get support at 4251-49 level and the second from where the bounce is expected at 4230-26 level.
The banks and reality stocks likely to be under pressure but the metals may find some buying. The RNRL is worth watching, good above 96 level. The GMR Infra is in news, good above 104-05 but very unlikely that it could trade above that level. The Nagarjuna constructions though finding support at 125 levels but struggling hard to cross the 145-48 resistance is in news.
The STOCK-TRADING is a “Skill-FULL Job”. NEVER blame others for the LOSS/DEALS.
Never Forget: I may be wrong, You may be wrong but markets always RIGHT.
Friday, August 22, 2008
Subscribe to:
Post Comments (Atom)
2 comments:
Stock market slump vs Real estate crash
Posted On : 04 Aug 2006 Total Views : 2866 Previous | Next
Academically, there is a direct correlation between stock market crash and property prices crash. Normally there is a time lag of approximately six months to one year between stock market crash and property prices crash. Whenever the stock markets have been passing through boom times, demand for and prices of property have gone high. Likewise, in depressed Stock markets, the property prices tend to soften. The reason for the relation between the two markets is that in rising market, the huge gains find real estate as the ideal place for parking funds leading to escalation in prices and in a falling market disposal of property is the quickest way to cover losses leading to a fall in property prices.
History has many examples that proved the above nexus. Some recent examples are quoted below:
• Japan real estate crashed in 1985 along with stock market crash. Its almost 20 years real estate market is still stagnant in Japan.
• In 1991 market crash in India (during Harshad Mehta time), real estate markets also crashed and the prices remained stagnant for next 6-7 years.
• In 2001 Nasdaq crash in USA, real estate market crashed by around 20-30%.
People who have lost heavily in stock markets are keen to dispose off their investments in the real estate market. Distress selling always depresses prices. Small builders facing financial shortage have to sell some of their property to meet financial requirements. Many other individual investors, who have purchased multiple properties with their own funds or loans for speculative purposes, now have to sell some of their property before prices go down further.
Reports from Mumbai, Delhi, Bangalore, Ahmedabad and Coimbatore clearly indicate that property prices (specifically residential property) have dropped 10 to 15 percent in prices. Fresh buying has come to a screeching halt in all major cities. The stock market correction could result in real estate prices coming down by 15-20 percent over the next 3 to 6 months. If the demand does not improve prices would start moving down and It would not be a surprise if the prices drop by up to 30 to 40 percent in near future.
Stock market is not the only factor responsible for downturn in the property market. Other factor that have escalated this crash are:
• Rising interest rates on housing loans from 8 to 10.5 percent in last two years have increased the monthly installments manifold.
• RBI has tightened liquidity. RBI has tightened lending norms by raising risk weightage for real estate loan to 150 percent. There was lot of speculation in real estate because of excess liquidity in the market.
• Rise in petrol prices and other commodities have further put the pressure on monthly budget of middle class, forcing them to postpone the purchase of house.
• Lack of Govt regulation in the market (it may be noted that govt is in the process of preparing a law to regulate real estate agents.
• Stock market crash is just a trigger, property prices have reached unsustainable levels on account of huge speculative demand and now property market will collapse under its own weight.
IT IS GOOD COORELATION.THE FACT IS THAT THE MARKETS TAKE CONSOLIDATION PERIOD, SOME TIMES IT TAKES LONTHER THAN ANTICIPATED DUE TO UNEXPECTED INSURGENCE OF NEGATIVE NEWS FLOW, OTHERWISE A NORMAL COURSE, WETHER WE LIKE IT NOT.
Post a Comment