SENSEX RECOVERS BY 496 PTS

The domestic stock markets took an about turn on Wednesday as crude oil prices dipped, the US markets rallied and also the Asian markets traded higher. On the domestic front, end of settlement of July derivatives contracts also helped speculators to push up the market, despite substantial foreign fund selling. As a result, the BSE Sensex rallied 496 points to close at 14,287 with banking and real estate stocks leading the gainers. The day’s rally added Rs 1.35 lakh crore to investors’ wealth with BSE’s market capitalisation now at Rs 46.60 lakh crore. On Tuesday, crude oil prices had dipped to near the $120-a-barrel level which led to a 200-plus points rally in the Dow Jones Index. This in turn provided a positive cue to Asian markets like Hong Kong and Japan. As a result the Sensex opened over 200 points higher and picked up gains through the day to close 3.6% higher.Market players are however not sure that the gains could be sustained. And the main reason for this is that foreign institutional investors (FIIs) were on the selling side, although buying by domestic funds more than offset the magnitude of selling by the foreign funds. BSE data showed that during the day FIIs net sold stocks worth about Rs 630 crore while domestic funds net bought stocks worth Rs 670 crore.
Brokers and dealers said it could have been strong speculative buying, a day ahead of the expiration of July derivatives contracts, that lifted the Sensex. There is a high probability that the speculators would try to sustain the rally on Thursday, and after the settlement is over would again pull it down on Friday.
The day’s gainers were led by banking and real estate stocks, the two stocks which were the worst hit on Tuesday, after the RBI increased key policy rates beyond market’s expectations.

Home, car EMIs set to get higher

With inflation remaining at double-digit levels for six weeks running, the RBI decided on Tuesday to further tighten its monetary policy. The measures will squeeze liquidity and push interest rates upwards-- for you it means EMIs on loans, whether for housing, car or other purposes, are likely to get still higher. The move is also likely to hit demand in the economy, which could dampen the growth momentum.
The central bank has hiked the rate at which it lends to banks--the repo rate --by half a percentage point and the proportion of deposits the banks have to set aside in cash-- the cash reserve ratio (CRR)-- by 0.25 percentage points.
A half percentage point hike in housing, car and personal loan interest rates seems on the cards. This would be the third time in calendar 2008 that rates have been moved upwards and the second time in the current month. Earlier this month, banks had increased lending rates by 0.5 to 0.75 percentage points.
Since the beginning of 2008, interest rates on home loans have already gone up by around one percentage point. Include the rise in the interest rate expected due to Tuesday's measure and the total increase will be to the tune of 1.5 percentage points. On a 20-year loan of Rs 50 lakh that translates into an increase in EMI of over Rs 5,250.
In fact, the interest rate on home loan has gone up by almost 75% from 7% in 2004 to 12.5% at present. This sharp hike in interest rates by 5.5% has led to increase in the EMI by around 50% over these last four years, causing a huge burden for the salaried middle class.
Reviewing the credit policy on Tuesday, RBI expressed the hope that these measures, along with those already taken, would help bring inflation down to "close to 7%" by the end of the financial year in March. However, back-of-theenvelop calculations show that if the wholesale price index remains at its current level till the end of 2008, it would still end the year with an inflation rate of just over 10%.
RBI governor Y V Reddy said controlling inflation was the key objective and that the central bank was more concerned about the poor, who are paying more to purchase food items like rice and pulses, than those who might be forced to pay more to borrow to buy a house or a car. Reddy conceded that growth was likely to be affected and projected an 8% figure for the year, down from the earlier projection of 8-8.5%. BANKS MAY HIKE INTEREST RATES RBI targets 7%

Investing in Indian Real Estate

Tax reform measures in the last few years have ensured real estate in India is one of the most productive investment sectors, with money invested in real estate offering regular returns on investment including appreciating in value. And, the Government of India by opening up 100% foreign direct investment, and fiscal reforms like stamp duty and property tax reductions, setting up real estate mutual funds has turned real estate into a promising investment option.

Already, it has approved the first Rs. 100-crore FDI project in Gurgaon. With urban populations expected to grow from 290-million to 600-million by 2021, housing requirements are expected to top 68-million by 2021, which means India's urban housing sector could do with an investment of US $25-billion over a 5-year period. Poised for rapid urbanisation, 3 out of 10 of the world's largest cities are in India. An influx of jobs due to off-shoring / outsourcing has resulted in rising disposable incomes, increased consumerism, factors responsible for changing the face of residential and commercial real estate in India.

Wishing to take advantage of real estate investment opportunities, banks and housing finance companies are falling over themselves to tie-up with developers or offer project loans at competitive rates.

Indian Real Estate: Foreign Direct Investment (FDI)

Recent government policies have seen to it that inbound FDI for housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure, no longer requires prior government approval, with the exception of the Reserve Bank of India (RBI). It is important that all inward remittances or issues of shares to NRIs are reported to RBI within 30-days, and all FDI in the above areas is subject to the following conditions:

Minimum area for development under each project is as under: Serviced housing plots, minimum requirement of 10 hectares. Construction-development projects, minimum built-up area requirement of 50,000 sq. metres. Combination project, either of the above two conditions suffices. Investment is further subject to the following conditions: Minimum capital investment = US$10 million for a wholly owned subsidiary, and US$5 million for joint ventures with Indian partners. Further, the funds have to be brought in within six months of commencing business.

It is not permissible to repatriate original investment before a period of three years from the date of minimum capital investment. However, if the investor gets prior approval from the Government through FIPB, early exit is permitted.

Fifty percent of the project is to be completed within 5-years from the date of obtaining all legal clearances. No undeveloped plots can be sold where roads, street lighting, water supply, drainage, sewerage and other conveniences are not available. Serviced housing plots can only be sold if the investor has provided infrastructure and obtained a completion certificate from the concerned local body / service agency.

Development has to be in accordance with town master plans, planning norms, standards, and local bye-laws.

The investor is responsible for obtaining all necessary approvals, including building / layout plans, internal / external / peripheral area development, infrastructure facilities, payment for development and other charges. All development has to be in compliance with State Government / Municipal / Local Body requirements that are prescribed under applicable rules / bye-laws / regulations. Further, Non Resident Indians (NRIs) are allowed investment under the Automatic Route of FDI in the following Housing and Real Estate Sector:

Services plot development and construction of built-up residential premises.

Real estate investment covering construction of residential / commercial premises including business centres, offices, etc. Development of townships.

City / regional level urban infrastructure facilities, including roads and bridges.

Investment in manufacture of building materials. Investment in participatory ventures in (i) to (v) above

Investment in housing finance institutions.

Permissible FDI private / joint / state investment in construction in the export processing zones (EPZS) / special economic zones (SEZS) is as follows:

100% FDI real estate investment within Special Economic Zone (SEZ). 100% FDI for developing a township within the SEZ i.e. residential areas, markets, playgrounds, clubs, recreation centres etc.

Standard Design Factory (SDF) building development in existing Special Economic Zones. SEZ land may be leased or sub-leased to developers as per relevant guidelines for this purpose.

Full freedom to allocate developed plots to approved SEZ units on commercial basis including competent authorities for provision of water, electricity, security, restaurants, recreation centres etc. along commercial lines.

As you read this, a wide spectrum of changes are and have taken place in Indian real estate. Various proposed reforms e.g. removal of tenancy laws, computerization of land records, correction in taxation structure etc., are ensuring India emerges as a favoured and profitable destination for real estate developers / investors, both domestic and international.

How To Trade Stock Market System

The stock market system is an avenue of how to trade stock for listed corporations. As a corporation is formed, its initial shareholders are able to acquire shares of stock from the point of subscription when a company is created. When a company starts to be traded to the public, the primary market comes in where those who subscribe to the initial public offering (IPO) takes on the shares of stock sold from point of IPO. When those who bought into a company at IPO point of view decides to sell their shares of stock to other people, they can do so by going to the stock market.

The stock market is a secondary market for securities trading wherein original or secondary holders of a company’s shares of stock can sell their stocks to other individuals within the frame work of the stock market system.

The stock market has buyers of stocks or those who wants to own a part of the company but wasn’t able to do so during the initial public offerings made by the company to the public when it has decided to list itself as a publicly listed company. The secondary market or the stock market allows other individuals to sell shares of the company when the initial shareholders may have realized that they want to sell their shares after gaining either significant profit or realized significant loss from point of acquiring a company from its IPO price.

As the stock market has developed and progressed over the years, the ways of how to trade stock from one individual to another has become more complicated and more challenging to be regulated. Technology has aided in providing more efficient ways of transactions. Front and backend solutions are put into place that helps direct the exchange of shares of stock in timely and secure manner.

Public education over how the stock market works is one of the primary concerns of the investing public in order to promote the trading activities of the stock market to other individuals who may also benefit from doing transactions over this secondary type of equities market.

With the abundance of relevant company information on performance of publicly listed companies, this information will help the investors to become more aware of the directions of the companies where they have share of stocks on and this will also aid them in how to trade stock and where to direct their investment strategies.

India's Sensex hits record high

Bombay's benchmark Sensex index jumped to 14,028.47 points when trading began on Tuesday, topping a previous peak set in November.

India's economy has beaten expectations by growing at an annualised rate of 9.2% during July to September.

The Sensex's recovery marks a change in fortunes for the exchange, which plunged in value earlier this year.

In later trading, however, the Sensex dropped below the 14,000 mark again, closing 63.32 points, or 0.5%, higher at 13,937.65.

Market analyst Rahul Rege said the rising stock index was the result of strong economic fundamentals and more players investing their money in the market.

"Lot of money has flowed in from foreign investors in the last three months..the investor base has widened tremendously, economic growth numbers are positive and corporates have registered good results," he said.

This year, foreign institutional investors pumped nearly $9bn into India.

Asia's fourth-largest economy has grown at an average of 8% in the last three years. But critics say the benefits have not reached the poor fast enough.

Inflation inches up at 11.91%

Inflation went up marginally to 11.91% during the week ended on July 5 from 11.89% in the previous week. Exuding confidence that measures taken by the gove r n m e n t would help m o d e r at e p r i c e s, Union finance minister P Chidambaram said the upward pressure on prices still exists. Food items, including pulses, atta, tea, fruits and some petroleum products like jet fuel became more expensive during the week under review, according to the WPI released by government on Thursday.
The finance ministry in a statement said the annual inflation rate for the group of 30 essential commodities during the week ended July 5 has declined to 5.74% from 5.98% in the week ending June 28, 2008.
It further said the prices of essential commodities like food grains, pulses, edible oils, vegetable, dairy, kerosene, soap and safety matches have more or less stabilised.

Sensex recovers by 536 pts on global cues

On Thursday, the stock market bounced back from its lows and reversed a five-session losing streak with the BSE Sensex closing 536 points or 4.36% higher at 13,112. It had sunk to a new low for 2008 in its previous trading session and market players said there was some bargain hunting witnessed in the markets with many blue-chip stocks available at multi-year lows. Significant drop in crude oil price coupled with some amount of short-covering from institutional players, post the turnaround, also helped the indices move northward, brokers and dealers said.
Investors saw their wealth increase by nearly Rs 88,000 crore with the BSE’s market capitalization now at Rs 42.2 lakh crore. The overall market breadth was positive with 1,536 stocks on the BSE closing higher compared to 1,081 laggards. The day’s gains however were restricted to large-cap indices, with the broader indices not gaining as much. The BSE mid-cap index closed 1.3% higher and the small-cap index moved up by just 1%.
During the day, the government released the inflation figure for the week ended July 5, which came in at 11.91%, compared to 11.89% in the previous week. Post the release of the inflation data, the finance ministry said that inflation has stabilized.
The government has decided to release the inflation figures on Thursday evenings henceforth rather than at noon on Fridays. There were concerns about leakage of sensitive data on inflation and also the government wanted to prevent traders and investors from overreacting to the data. Over the past few weeks as inflation soared to record highs, the trading sessions on Friday were marked by a high degree of volatility.
On Thursday, among the sectoral indices, the banking index was the biggest gainer after being beaten down in the previous trading sessions. The index moved up by over 6%. Other indices like capital goods and realty bounced back.