A short-term rise is still on the cards

We may witness a minor rally on domestic bourses

The market was down to its two-month low as the Greece debt crisis sent jitters among investors. The Sensex ended at 16,987, down 100 points (0.6%) and the Nifty ended at 5,090, down 34 points (0.6%). The bourses were down in the early session on weak global cues. However, they staged a strong recovery in the afternoon session. At the late trading session the market slid to pare some of its gains posted in afternoon trading.

Asian stocks was down on Thursday on concerns that the Greek deficit crisis may spread through Europe after Moody's Investors Service placed its credit rating for Portugal on a review for a possible downgrade. Key benchmark indices in Hong Kong, Indonesia, Japan, South Korea, Singapore and Taiwan fell by 0.5% to 3.27%. The Shanghai Composite lost 4.11%.

US stocks were down on Wednesday on concerns that the Greece debt crisis could spread to bigger European economies. However, generally positive data on the US private sector job market and the economy's services sector limited the slide. The Dow was down 58 points (0.54%) to 10,868. The S&P 500 fell 7.7 points (0.6%) to 1,167. The Nasdaq Composite lost 22 points (0.9%) to 2,402.

Fed Chairman Ben Bernanke will speak today at the Chicago Fed's 46th annual conference on bank structure and competition. The US weekly jobless claims data and April sales reports from chain stores is also due today. The European Central Bank is likely to hold interest rates at existing levels. European laws prevent ECB to buy government bonds directly from the government; however, it can buy second-hand bonds from the banks. 

The wholesale price index is expected to fall 6%-7% within three months, the finance ministry's chief economic adviser said on Thursday. India’s annual wholesale inflation rose to 9.9% in March, compared with the 9.89% rise in February and 1.2% a year ago. The food price index rose 16.04% in the 12 months to 24th April, slower than an annual rise of 16.61% in the previous week, government data showed on Thursday. The fuel price index rose an annual 12.69%, same as the week ago.

Wheat stocks have increased more than seven times the target; however, the ban on wheat exports is still on. Wheat stocks on 1st May were at 30.8 million tonnes (MT). The government has decided to give 3MT of subsidised grains in aid to states for the next six months.

Foreign institutional investors were net buyers purchasing stocks worth Rs1,589 crore. Domestic institutional investors also bought stocks of Rs691 crore. The rupee rebounded from its low on possible dollar selling by the Reserve Bank of India (RBI).

JSL (up 1.6%) plans to set up a 1320MW (660x2) super critical power plant at Luni, Orissa. D-Link (up 8.3%) has launched a green managed switch—the D-Link Green 24 port managed gigabit switch. EIH (up 1%) plans to acquire 45.85% equity in Amex Investment, through its international hotel joint venture company, EIH Holdings Ltd British Virgin Islands for $45 million.

IRB Infrastructure Developers (down 1.5%) has said that it has emerged as the preferred bidder for the design, build, finance and operation of the six-laning of the Tumkur- Chitradurga section from 75km to 189km of NH 4 in Karnataka. The project is on a premium basis with a concession period of 26 years. The company has to pay a premium of Rs140.40 crore for the project to the National Highways Authority of India (NHAI) in the first year.
 
 

 
 

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The foul play in super-built up constructions

Developers are busy constructing six feet wide flower-beds in their properties for hiking FSI

Developers in Mumbai are vigorously using the super-built up area and misleading consumers. In November 2008, the Maharashtra government came up with a housing policy which stated that sales of all properties should be done on carpet area basis. However, developers still do not sell the properties on carpet area basis because they get a chance to play with the free Floor Space Index (FSI) areas by including it as part of the super built-up area and they charge the consumers for the same.

The regulation was supposed to become a law within three months of the draft legislation. By March 2009, it should have been a law, but it is not being followed. Builders are still constructing properties on super built-up basis without passing on the benefit of the free FSI to consumers.

“The Brihanmumbai Municipal Corporation (BMC) only allows four feet flower beds,” said Pranav Desai, a Mumbai-based architect.

Most new properties have huge spaces dedicated towards flower beds, which are given to the developers free of FSI. “Today developers are talking of flower beds, which are 12 feet wide—how can you call it a flower bed? Developers are bucking the system openly and blatantly and no one is telling them anything,” said Pranay Vakil, chairman, Knight Frank (India) Pvt Ltd.

If you glance through the brochures of various developers, you will come across a common feature—they mention the super built-up area, built-up area and (in brackets) the carpet area. They are following the law, but only indirectly. One high-rise at Peddar Road, south Mumbai, has not received the occupation certificate because all the balconies are flower beds, which are approximately six feet wide.

An industry expert pointed out that after the law was passed, all the properties have to be sold on a carpet area basis. However, a few developers have cleverly converted the total built-up area into carpet area, which has eventually raised the price of the property. It has not made any difference to the developers, but consumers have had to suffer.

“Developers have drastically raised the super built-up area of the new properties. From 50% super built-up area, it has almost reached 100%,” said Pankaj Kapoor, founder, Liases Foras.

However, with the increase in super-built up area, the cost of properties has also doubled over a period of time. Consumers are getting lesser space at a higher cost. For example, if an apartment of 1,000 sq ft carpet area had a saleable area of 1,400 sq ft in Kandivali (a Mumbai suburb) in 2005, at that time, the apartment was priced at Rs2,500 per sq ft. The total cost came to Rs25 lakh. But now, an apartment of 1,000 sq ft is quoted as 2,000 sq ft saleable area. Taking the current cost into consideration, it is priced around Rs8,000 per sq ft. The total cost of the apartment has jumped to Rs1.60 crore.

User

COMMENTS

vinayk shringarpure

6 years ago

Can builder calculate flower bed as a carpet area.

vatsal shah

6 years ago

builder are not only loading 40% or 50% on carpet area and talking money for for various flower beds @ 25%- 50% of capet area,and still they now allowing us to construct anying in flower bed area,till maintainance period by builder, this is ridiculas.BMC will not see illigal flower bed with flooring provided by builder but they will see small shelf in F.B area and tell to immediate removal? this is the case of reputed builder like silver group mumbai.

yogesh

7 years ago

I think the govt and representative associations of develoeprs should think about selling flats not on per sq ft basis, but they should now start it at square cube basis. I heard builders are selling flat with a height of just 8ft, thus reducing the total sq cube area.

R Balakrishnan

7 years ago

Here is where people like Mr Deepak Parekh can make a difference, if they want to. Standardise measurements, price units etc so that one sq ft of a flat in mumbai, chennai, delhi or nagpur is exactly the same. There is an association called CREDAI, which should be doing this, but it will not!
Real estate brokers/agents/ consultants all keep quiet on this. Everyone has a finger in the pie.

S.D.Israni

7 years ago

By and large most of the builders have always cheated, 'yes cheated' the customers. In the last five years the loot has been with renewed vigour. Reasons are not far to see. Politicians and the babus receive their share and then the builders are free to milch the hapless buyers. Any wonder that builders are indulging in daylight robbery. Most of the big names in this filed are robber barons. Please don't believe my word, just have a look at the agreement of any builder and you will realise how the buyer is always the looser. It is a sorry state of affairs with the law makers and law protectors in deep sleep while the citizens have to spend sleepless nights.

‘Swavalamban’ initiative to accelerate NPS yet to pick up

Despite government initiatives, the NPS has not generated enough interest among the masses. What needs to be done to prop up this excellent scheme?

Investors have not responded with much enthusiasm to the ‘Swavalamban’ initiative extended by the government under which it will contribute Rs1,000 per year (for a period of four years) to every New Pension Scheme (NPS) account opened this year with at least a matching contribution from the subscriber. Citizens in the non-government segment continue to abstain from investing in the NPS. The number of non-government subscribers to NPS registered as of 30 April 2010 has touched 5,532. Although the figure is more than double that of October 2009 when non-government subscribers were 2,321, the absolute numbers are still small.

The total central government employees registered under the NPS have gone up to 6,09,376 from 5,38,276 in October last year. However, there has been a large increase in numbers from among the state government employees during the same period. The number of subscribers under this category rose to 2,55,903 from the earlier 1,10,024.

An officer from one of the point of presence service providers (PoP-SP) pointed out that there have been no significant additions since the budget announcement. He said, “The momentum has not picked up much despite various initiatives from the government and banks. We have been told that this product should be bought and not sold. So we are not expected to advise customers in any way. The policy is that we wait for the customers to approach us. We are fully equipped and ready to accept subscriptions in the NPS.”

Incidentally, this PoP-SP has commissioned more than 300 of its branches to provide NPS registration facilities to the subscribers. Several other banks have also mobilised a chunk of personnel and designated a part of their infrastructure for catering to the NPS subscriptions. Another PoP service provider confirmed, “Although there is an improvement in the NPS accounts, it is not as much as what was expected.”

Commenting on what needs to be done to popularise the scheme, the official stated, “We need to approach private sector companies and talk to employees about the benefits of the scheme. The government could also probably offer a minimum dividend or guarantee as people may be worried about what they will end up with after so many years. Things will change if the scheme assures a minimum return.”

Speaking about the possible actions being considered to promote the scheme, an official from the Pension Regulatory and Development Authority (PFRDA) said, “The Swavalamban initiative has seen a slow and steady rise from the earlier rate of enrolment. The first phase of implementation is almost over. We are now looking at various promotional and monetary incentives for enrolment. We are considering media campaigns and strengthening the regulatory mechanism through monitoring the PoPs more closely and how to make them promote the scheme better.”

The still lukewarm response to the NPS is unfortunate considering that it is a product that is actually tailor-made for the requirements of the masses. It is among the least expensive balanced investment products in the market and the cheapest pension product in the offing, which would make a huge difference to long-term wealth.

Lack of confidence in the product is also a mitigating factor. Investors are wary about how much they will end up with after the contribution period. Investors should be advised by the PoPs regarding the portfolio allocation to debt and equity before investing. Awareness among the masses still remains a concern for the pension regulator and hence, its plans to promote the scheme need to take shape for the NPS to achieve its true potential.

User

COMMENTS

Kodandapani Boga

3 years ago

please send me details for marketing for swavalamban plan

BSRAWAT

6 years ago

please tell me full detail of this scheme and contact nos.

CRao

6 years ago

Swa

P. Satyanarayana Reddy

7 years ago

NPS is bond to fail in current form.
first it have tax disadvantages and net it does have direct debt opt for payments. So people have to go to pop's every month to present their cheque in day of ATM and credit card..... This is like following old methods in new generation.

Pooja

7 years ago

Agree with Mr Manoj.
An acquaintance visited the so called POPs for NPS - Axis Bank branches. However people at the Bank seemed 'unaware' of such a product. This was surprising after numerous articles in publications on various POP.
The obvious point here is that you may have communicated with the select TG about the product. But have failed to set up a robust distribution model.
Business is not equivalent to charity. Even a shopkeeper who sells soap gets a commission.....so why would someone take the trouble to sell or understand a complicated financial product for no remuneration?

Somasundaramgurunathan

7 years ago

let me know where can i approach to take the policy

REPLY

Pranav

In Reply to Somasundaramgurunathan 7 years ago

Check this link for all details:

http://knowyourinvestments.blogspot.com/2010/03/new-pension-scheme.html

Sunil

7 years ago

If a particular movie is liked a person, he advises his family members, relatives, neighbours and friends to go and watch the movie! If there is a scheme being run by a particular theatre, for eg. buy one get one free, etc. I feel it is important to inform your friends that a special scheme is available at a particular time.
It is not always about benefitting from others, but also passing on benefits to your learned friends in the form of sincere advice, and then hoping that the outcome will be positive and good for all the investors.
The financial advisor (I have been known to advise friends for the last 27 years), has always been treated like a punk on the roadside, and howsoever qualified he/she may be, no guarantees are possible in any particular scenario.
The laloo investors, as they seem to call themselves, never manage to point a finger to people who created the biggest scams! Why? Simply because a laloo believes that, WHEN the Investment Dips it is the fault of the Advisor, and if it Grows, then surely it is the Laloo, who had invested wisely, and at the right time!
This debate has gone on for long and will continue, however I wish to believe that, May all Laloos investments rise and fall according to the nuances of the market forces, and the laloos profits and losses (only on paper), cause the laloos to skip a few heartbeats, now and then!!
After all doctors and lawyers, have to continue their business, whether you die or live, or you win or you lose!!!!!
Have a nice day!

Manoj

7 years ago

Going by SEBI's logic & as per the general wisdom of many learned and erudite persons here on this forum, a plan which has zero entry load should have been a runaway success. Add to this fact an obscenely low fund management charges and you have a sure fire recipe for a product to become a super seller.

But reality is different. The average joe in the market does not understand the financial imlications of a long term investment product. I have come across a very large number of people who compare the returns of ULIP with that of a mutual fund and pass the judgement that ULIPs are bad, completely forgetting that ULIPs are meant to be products which they should hold on atleast till the time of retirement since it covers their life.

This, then is the reality. For any financial advisor, where is the incentive to advice this product to his clients? Or more pertinently, why should he? Neither the government pays him nor the client. And he is not running a charity to provide selfless service!!!

Roopsingh

7 years ago

This is ''agent free'' scheme-so it is fully self served menu-
but i would caution-it is a TRAP-to grab peoples money-yor money would be locked till age of 58 years-
this scheme is just 50% DEBT and 50% bluechip equity-nothing special then this stuff-then i would recommend not to put yor money in some ones hands for so long period-better make yor 50% in any bank FD and 50% in NIFTY or SENSEX fund which are low cost-so go for this and you will have liquidity at hangs to meet emergencies-

Sunil Wadhwani

7 years ago

Can ANY resident individual of India (a tax payer) invest Rs. 1000/- per month in the Swavalamban scheme (i.e. New Pension Scheme) after 1-4-2010, and get the benefit of Rs. 1000/- per annum as contribution from the GOI.
If yes, does the investor pay Rs. 11000/- during the year or Rs. 12000/- and have the POPs been informed about the same??
On enquiry with certain POPs, they are unclear regarding the same, and one POP executive was completely shocked to hear about this. When I explained that the FM had announced this in the budget speech, the response was, "No commission is paid or received for this scheme!!"
Any one who can clarify???

REPLY

Pranav

In Reply to Sunil Wadhwani 7 years ago

Government will add Rs. 1,000 for 3 years, provided your investments are less than Rs. 12,000 per year in this scheme.

http://knowyourinvestments.blogspot.com/2010/03/new-pension-scheme.html

KRSowmyanarayanan

7 years ago

1. Pl let me know the details of the scheme.
2. How and where the acct. shd be opened.
3. Ny commission or brokerage for procuring agents

REPLY

Pranav

In Reply to KRSowmyanarayanan 7 years ago

Check this link for all details:

http://knowyourinvestments.blogspot.com/2010/03/new-pension-scheme.html

Roopsingh Solanki

7 years ago

I personally feel NPS is not going to catch up the way it has been launched-the govt wanted it to be low cost-so it elimineted IFA's from thios scheme-but what about the costs which govt is putting like yearly contribution-is this not a bad route in principals laid down for this scheme?at last it will be coming from tax payers pocket-some one will loose money for promotion of this scheme-
and the worst part is that any one can formulate its NPS planning by investing in any highly rated debt bonds or bank FD"s and rest in index fund which are low cost-in 50-50%,this portfolio will be liquid in nature then this NPS(non promoted / non performing schemes)
govt thinks its elf to be very clever-but some times very intelligent people are proved the biggest fools-and fools come out as the most wiser-

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