Stocks
Nifty, Sensex has more room to rise - Thursday closing report
Anticipation of healthy quarterly earnings results and budgetary sops, coupled with a strengthened rupee, buoyed the Indian equities markets on Thursday. Both the key indices provisionally closed in the green, as healthy buying was witnessed in capital goods, IT and TECK (technology, media and entertainment) stocks.
 
However, negative European indices and caution ahead of the release of the Index of Industrial Production (IIP) and Consumer Price Index (CPI) data for December capped gains. 
 
The trends of the major indices in the course of Thursday’s trading are given in the table below:
 
 
The wider 51-scrip Nifty of the National Stock Exchange (NSE) rose by 26.55 points or 0.32% to 8,407.20 points. The Sensex touched a high of 27,278.93 points and a low of 27,166.69 points during the intra-day trade.
 
The BSE market breadth was tilted in favour of the bears - with 1,556 declines and 1,208 advances. On Wednesday, the benchmark indices surged on the back of positive global cues and higher crude oil prices. The broader market underperformed the headline indices with BSE Midcap gaining 0.16% and BSE Smallcap down 0.15%. 
 
IT Index rose around 2% on BSE with Infosys gaining 3.5% in today’s trade ahead of its Q3 earnings tomorrow.
 
Pharma index pared earlier losses but still settled the day 0.60% lower. The index was down after Trump said yesterday pharmaceutical companies are "getting away with murder". Lupin, Dr Reddy’s and Sun Pharma fell between 0.6%-2%.
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The U.S. dollar nursed widespread losses on Thursday after President-elect Donald Trump's long-awaited news briefing provided scant clarity on future fiscal policies, disappointing bulls wagering on major stimulus. European shares fell, bucking gains in Asia and Wall Street overnight and weighed down by a 2 percent slump in healthcare stocks after Trump said pharmaceutical firms had been "getting away with murder" with their prices.
 
The closing values of the major Asian indices are given in the table below:
 
 
 

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Demonetisation will have far-reaching impact on real estate, says a study
Real estate, as a sector, has been one of the major dumping grounds for unaccounted money and counterfeit currency, also known as black money in common parlance. The demonetisation drive, thus, will have a far-reaching impact on real estate, especially the luxury market and plotted development, says a research report. 
 
Liases Foras Real Estate Ratings and Research Pvt Ltd, says in its note, "Luxury housing is going to take a big-time hit as large transactions were happening in black. Developers catering to this segment are sure to face liquidity pressure. On the other hand, land has always been one of the favourite assets to park black money. In the absence of black money, hoarders will not find it appealing to purchase land and demand will be dented. As a result, landowners are likely to be more willing to negotiate prices. We anticipate land prices to witness around 20%-25% price correction. Tier II and Tier III markets and perhaps some Tier I markets, where plotted development is rampant, are likely to be most affected by this."
 
 
According to the non-brokerage research centric firm that offers data and advisory services, around 80-90% of the deals in luxury and plotted markets have a cash component of 40-50%. The total cash in the system is estimated to be Rs30,103 crore, which is 21% of the annual market.
 
 
"For the luxury market, Mumbai Metropolitan Region (MMR) and National Capital Region (NCR) are likely to be the most affected markets. In the tier I cities, Bengaluru and Pune have less than 20% value contribution to luxury sales. Amongst tier II cities, Surat will be highly affected as luxury sales form 50% of their business," the report says.
 
Talking about the secondary market, Liases Foras sees a huge impact on sales. It says, "We expect the secondary or resale market to be seriously hit because many transactions in that segment happen in cash, with sellers wanting to avoid long-term capital gains tax. Small-unorganised developers and other unreliable builders may be reduced to a miniscule percentage, as non-compliance has always been an issue there."
 
 
According to the report, the housing market in India clocks in sales of 8.5 lakh units a year, of which 36% is dominated by the primary market, while 64% comes from the secondary market and self-constructed houses. It must be noted that 34% of the sales in tier I cities are from the primary market, while in tier II cities it stands at 45%. 
 
NCR leads the tier I cities in terms of secondary market contribution, while Pune has the minimum exposure to the resale of self-constructed houses, the report says.
 
Liases Foras says, as per its analysis, Bengaluru and Chennai would be the most affected markets post demonetisation in terms of plotted market. It says, "The plotted business segment in Bengaluru and Chennai will be most affected because the trend for the same is dominant in these two cities. Among tier II cities, Indore and Chandigarh will be the worst impacted with a plot market contribution of 29% and 14% each."
 
 
Liases Foras conducted a sensitivity analysis and studied the impact of sales in the luxury and plotted market under price correction in two scenarios, such as 10% and 20%. It must be noted that luxury and plotted markets have inelastic demand. The reduction in prices do not result in higher transactions. Both these segments are investor-driven markets and price appreciation attracts buyers to these markets. Hence, it expects the market size for these two segments in the primary as well as secondary market to reduce in the range of 7% to 22%.
 
Impact analysis at 20% price reduction
 
Leaving aside extremes, Liases Foras says if we pick the scenario with a 20% price decline, the market size contraction will be felt most in NCR, MMR and Bengaluru. About 17% of the business in NCR is contributed by plotted, luxury and resale markets. Their share in MMR and Bengaluru stand at 15% and 14%, respectively.
 
"We expect the price correction to happen over the medium to long-term as a result of considerable pressure on the market due to inventory overhang and other aspects. Due to reduction in prices, the number of transactions will increase, thus the value of sales will go up," Liases Foras says.
 
As per the research note, the straight outcome of 20%-25% reduction in land price is reduction in development cost, which would increase the margin for the developer. Prior to demonetisation, developers were not able to get significant margins but now, after price reduction, can expect better margins. The example shows a sizeable increase in margin from 10% to 32%. In the best possible consequence of this, developers will be able to pass on the benefit to the consumers through reduced pricing. Increased demand on this account will lead to better sales realisations for the developer, it added.
 
 
According to Liases Foras, there is an expectation that banks may proceed to reduce interest rates, which it feels augurs well for the end-user. Affordability will further increase by 11% in case interest rates reduce to 8.5%. Moreover, reduced pricing by developers will lure more end-users to the market. Affordability has increased by 23% in the last one year due to price stagnancy and interest rate reduction.
 
 
"Briefly, demonetisation is the quintessential surgical strike - sharp and perfectly-timed! Not only will it usher in an era of efficient pricing in real estate and increase involvement of end-users, it will also tackle deep-rooted issues of red-tape on the approval front. Developers will face reduced delays in securing approvals and this will result in faster completion of construction in the long-term. This is a bold step in eradicating black money from the financial system and if it achieves the desired outcome, real estate will be the biggest beneficiary. Ultimately, real estate is one such sector that truly reflects the face of the economy. The more transparent and strong an economy is, the better it augurs for the health of the real estate market. The efficiency that will prevail in the market will outweigh the short-term negative impact of demonetisation on the real estate market," Liases Foras concluded.

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COMMENTS

BR

6 months ago

I do not understand why demonisation prevents sellers from selling @ higher prices.Yesterday 20.1.17 as I was writing my comment a flat builder called & said that many people paid cash & bought flats near Mantata TechPark, Bangalore to avoid losing money which was demonetised. I am searching for only for an Independent house or a vacant
Plot to build a house on it to live in it.A seller who agreed to sell a 25 yr old house (which was to be broken by the buyer & replaced by a new one)&take a DD for Govt Guideline Value & a 2nd DO for the balance but no cash in November'16 & wanted to buy another property with that money,said after demonetisation that he cannot explain to the bank,the difference in money between one DD stated in Sale deed & the other DD for the extra including big profit.He said that he will have to pay I.Tax & Self Assessment Tax on it this fin.yr. He refused to sell & said that the seller from whom he was to buy also will have trouble in handling cash difference.He said that he wants Regn done on full value & not on Govt Guideline value. He wanted the buyer to pay Regn fee& Stamp duty on full value.He wanted the buyer to pay 2% as Broker's commission from buyer & 2% from seller.

BR

6 months ago

I do not understand why demonisation prevents sellers from selling @ higher prices.Yesterday 20.1.17 as I was writing my comment a flat builder called & said that many people paid cash & bought flats near Mantata TechPark, Bangalore to avoid losing money which was demonetised. I am searching for only for an Independent house or a vacant
Plot to build a house on it to live in it.A seller who agreed to sell a 25 yr old house (which was to be broken by the buyer & replaced by a new one)&take a DD for Govt Guideline Value & a 2nd DO for the balance but no cash in November'16 & wanted to buy another property with that money,said after demonetisation that he cannot explain to the bank,the difference in money between one DD stated in Sale deed & the other DD for the extra including big profit.He said that he will have to pay I.Tax & Self Assessment Tax on it this fin.yr. He refused to sell & said that the seller from whom he was to buy also will have trouble in handling cash difference.He said that he wants Regn done on full value & not on Govt Guideline value. He wanted the buyer to pay Regn fee& Stamp duty on full value.He wanted the buyer to pay 2% as Broker's commission from buyer & 2% from seller.

BR

6 months ago

I do not understand why demonisation prevents sellers from selling @ higher prices.Yesterday 20.1.17 as I was writing my comment a flat builder called & said that many people paid cash & bought flats near Mantata TechPark, Bangalore to avoid losing money which was demonetised. I am searching for only for an Independent house or a vacant
Plot to build a house on it to live in it.A seller who agreed to sell a 25 yr old house (which was to be broken by the buyer & replaced by a new one)&take a DD for Govt Guideline Value & a 2nd DO for the balance but no cash in November'16 & wanted to buy another property with that money,said after demonetisation that he cannot explain to the bank,the difference in money between one DD stated in Sale deed & the other DD for the extra including big profit.He said that he will have to pay I.Tax & Self Assessment Tax on it this fin.yr. He refused to sell & said that the seller from whom he was to buy also will have trouble in handling cash difference.He said that he wants Regn done on full value & not on Govt Guideline value. He wanted the buyer to pay Regn fee& Stamp duty on full value.He wanted the buyer to pay 2% as Broker's commission from buyer & 2% from seller.

BR

6 months ago

I do not understand why demonisation prevents sellers from selling @ higher prices.Yesterday 20.1.17 as I was writing my comment a flat builder called & said that many people paid cash & bought flats near Mantata TechPark, Bangalore to avoid losing money which was demonetised. I am searching for only for an Independent house or a vacant
Plot to build a house on it to live in it.A seller who agreed to sell a 25 yr old house (which was to be broken by the buyer & replaced by a new one)&take a DD for Govt Guideline Value & a 2nd DO for the balance but no cash in November'16 & wanted to buy another property with that money,said after demonetisation that he cannot explain to the bank,the difference in money between one DD stated in Sale deed & the other DD for the extra including big profit.He said that he will have to pay I.Tax & Self Assessment Tax on it this fin.yr. He refused to sell & said that the seller from whom he was to buy also will have trouble in handling cash difference.He said that he wants Regn done on full value & not on Govt Guideline value. He wanted the buyer to pay Regn fee& Stamp duty on full value.He wanted the buyer to pay 2% as Broker's commission from buyer & 2% from seller.

BR

6 months ago

I do not understand why demonisation prevents sellers from selling @ higher prices.Yesterday 20.1.17 as I was writing my comment a flat builder called & said that many people paid cash & bought flats near Mantata TechPark, Bangalore to avoid losing money which was demonetised. I am searching for only for an Independent house or a vacant
Plot to build a house on it to live in it.A seller who agreed to sell a 25 yr old house (which was to be broken by the buyer & replaced by a new one)&take a DD for Govt Guideline Value & a 2nd DO for the balance but no cash in November'16 & wanted to buy another property with that money,said after demonetisation that he cannot explain to the bank,the difference in money between one DD stated in Sale deed & the other DD for the extra including big profit.He said that he will have to pay I.Tax & Self Assessment Tax on it this fin.yr. He refused to sell & said that the seller from whom he was to buy also will have trouble in handling cash difference.He said that he wants Regn done on full value & not on Govt Guideline value. He wanted the buyer to pay Regn fee& Stamp duty on full value.He wanted the buyer to pay 2% as Broker's commission from buyer & 2% from seller.

BR

6 months ago

I do not understand why demonisation prevents sellers from selling @ higher prices.Yesterday 20.1.17 as I was writing my comment a flat builder called & said that many people paid cash & bought flats near Mantata TechPark, Bangalore to avoid losing money which was demonetised. I am searching for only for an Independent house or a vacant
Plot to build a house on it to live in it.A seller who agreed to sell a 25 yr old house (which was to be broken by the buyer & replaced by a new one)&take a DD for Govt Guideline Value & a 2nd DO for the balance but no cash in November'16 & wanted to buy another property with that money,said after demonetisation that he cannot explain to the bank,the difference in money between one DD stated in Sale deed & the other DD for the extra including big profit.He said that he will have to pay I.Tax & Self Assessment Tax on it this fin.yr. He refused to sell & said that the seller from whom he was to buy also will have trouble in handling cash difference.He said that he wants Regn done on full value & not on Govt Guideline value. He wanted the buyer to pay Regn fee& Stamp duty on full value.He wanted the buyer to pay 2% as Broker's commission from buyer & 2% from seller.

RAVI RAM PV

6 months ago

Good joke. Thought Moneylife was more grounded than this.

BR

6 months ago

Land price of plots in Bangalore has not fallen.Sellers say that they will not sell at lower prices than what they quoted before demonetisation.Small buyers as of 1 plot/ house for own use cannot get any for less price.They must pay by Demand draft for full value & also for Stamp duty & Regn fee.Buyers who earlier agreed to take DD for GovtGuideline value & for the balance Unregd value wanted to avoid taxes.They now think that only now after demonisation need to explain to banks & I.Tax dept how they got the Unregd sum.So they fear & ask for DD for full value.Buyer must pay more unlike earlier when price was lessened as much cash was given to compensate for low price. Sellers of big no.of flats sold them partly for big cash sums & partly by cheques.SoPrices did not fall.I am searching for 3 years but did not get at low price.Greed rules.Sellers are willing to a wait for more prices.They want more cash payment now too & ask buyer to draw money daily from bank & pay Unregd part against receipt.

REPLY

P b Sarma

In Reply to BR 6 months ago

IT IS NOT EASY TO SELL A FLAT OR HOUSE.IMMEDIATELY THE SELLERS PUT A BRAVE FACE.AFTER ONE OR TWO YEARS THEY WILL BE TIRED OF WAITING AND WILL BE FORCED TO MAKE DISTRESS SALES.YOU CAN FIND REDUCTION IN FLAT PRICES BY THOSE SELLERS WHO CONSTRUCTED WITHOUT CONFIRMED BOOKINGS AND ADVANCES.ANYWAY IT IS BETTER TO PURCHASE FULLY COMPLETED APARTMENT OR EVEN A SECOND SALE APT IN A GOOD APT COMPLEX.THE BUILDERS ARE NOT KEEPING UP THEIR COMMITMENTS AS TO THE QUALITY OR TIME OF COMPLETION IN MOST OF THE CASES AND CAUSING A LOT OF LOSS IN CASE APARTMENTS ARE BOOKED BEFORE COMPLETION.IF IT IS A COMPLETED APARTMENT,YOU CAN ALWAYS VERIFY EVERYTHING AND FIND OUT THE REAL WORTH OF THE APARTMENT.IN THE NEXT FEW MONTHS OR YEARS ONE MAY COME ACROSS MANY COMPLETED APARTMENTS AT REASONABLE RATES.

BR

6 months ago

Land price of plots in Bangalore has not fallen.Sellers say that they will not sell at lower prices than what they quoted before demonetisation.Small buyers as of 1 plot/ house for own use cannot get any for less price.They must pay by Demand draft for full value & also for Stamp duty & Regn fee.Buyers who earlier agreed to take DD for GovtGuideline value & for the balance Unregd value wanted to avoid taxes.They now think that only now after demonisation need to explain to banks & I.Tax dept how they got the Unregd sum.So they fear & ask for DD for full value.Buyer must pay more unlike earlier when price was lessened as much cash was given to compensate for low price. Sellers of big no.of flats sold them partly for big cash sums & partly by cheques.SoPrices did not fall.I am searching for 3 years but did not get at low price.Greed rules.Sellers are willing to a wait for more prices.They want more cash payment now too & ask buyer to draw money daily from bank & pay Unregd part against receipt.

P b Sarma

6 months ago

The information is visionary.

kothapalli srinivasu

6 months ago

minister calls district officer and said official tour next two day after tour he goes to private function arrange some gift like gold what he does he cant put his own money he collect money from his office users this is the black money stop the production and after search people

REPLY

P b Sarma

In Reply to kothapalli srinivasu 6 months ago

THE CORRUPTION STARTS ALWAYS LIKE THAT.SEED IS ALWAYS SMALL COMPARED TO THE TREE.INDIANS TOOK IT AS A WAY OF LIFE SINCE IT IS ENCOURAGED FROM THE TOP.THIS MUST GO.THE TOP PEOPLE MUST REFORM THEMSELVES THROUGH ELECTORAL REFORMS AND THEN ONLY COUNTRY WILL PROSPER.

Prioritising job creation, Trump targets pharmas
President-elect Donald Trump has announced that creating jobs would be the cornerstone of his presidency and took aim at the pharmaceutical sector vowing to bring the industry back to the US.
 
Overall, his policies spell trouble for nations that seek to expand exports to the US. 
 
"We're going to create jobs," he declared at his first news conference here on Wednesday. "I said that I will be the greatest jobs producer that God ever created. And I mean that."
 
In his hour-long meeting with over 250 media people at the Trump Tower, he gave more time to jobs creation and bringing back jobs than to foreign policy.
 
After outlining what he said were his successes in bringing back manufacturing to the US, he turned on the pharmaceutical industry.
 
"We've got to get our drug industry back," he said. "Our drug industry has been disastrous. They're leaving left and right. They supply our drugs, but they don't make them here, to a large extent."
 
India exported $6 billion worth of drugs to the US in 2015 and could feel the impact of this policy, although it could also gain from his plans to cut the cost of pharmaceuticals because of India's leadership in generics, an area in which US companies have not left the country like branded pharma have.
 
He accused the pharma sector of "getting away with murder" by charging high process -- the bidding process for buying drugs is flawed.
 
"Pharma has a lot of lobbies and a lot of lobbyists and a lot of power and there's very little bidding on drugs," he said. 
 
"We're the largest buyer of drugs in the world and yet we don't bid properly and we're going to start bidding and we're going to save billions of dollars over a period of time."
 
He listed companies like Fiat Chrysler and Ford planning to set up automobile factories in the US, instead of abroad and mentioned his meetings with Chinese entrepreneur Jack Ma, the founder of the e-commerce giant Ali Baba, as examples of how his election is contributing to jobs creation.
 
He asserted in the next couple of weeks more companies would be announcing plans to be set up factories in the America Midwest, from where he drew the core of his support from those hurt by the deindustrialisation.
 
As part of his plans to cut government waste, he cited the examples of F-35 and F-18 aircraft programmes, which he asserted, were over budget by billions of dollars and behind schedule. 
 
He said that he would be working with generals and admirals to turn them around the lower costs.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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