Friday, August 14, 2009
Inflation slips to 33-year low
Inflation slips to 33-year low
The Economic Times, August 14, 2009, Page 1 & 7
The annual rate of inflation touched a 33-year low of -1.74% for the week ended August 1, but there was no respite for consumers as poor rains continued to drive up prices of food articles, data released by the ministry of commerce and industry on Thursday showed. The wholesale price index based annual rate of inflation stayed in the negative for the ninth straight week on account of high base effect.
Inflation continues free fall, at 33-yr low
The Economic Times, August 14, 2009,
Our Bureau NEW DELHI
THE inflation rate based on wholesale price index (WPI) fell for the ninth straight week for the week ended August 1, but economists warned it was poised to rise in the months ahead as industrial demand picked up steam and monsoon failure lifted food prices.
The annual rate of inflation fell to a 33-year low of -1.74%, data released by the ministry of commerce and industry showed on Thursday, continuing its trend of the past several weeks and at total variance with the actual inflation experienced by consumers. Consumer price inflation for June stood above 10%.
Kaushal Sampat of Dun & Bradstreet forecast WPI inflation touching 5.8% by the end of the current fiscal year as the base year effect fades away amid increasing commodity prices, rising foodgrain prices caused by delayed monsoon and an expansionary fiscal policy.
The base year effect—inflation had peaked at 12.91% in the corresponding week last year—has continued to depress the headline WPI number in the last eight weeks, although underlying prices have been rising.
The high prices of food items in the retail market don’t get reflected in WPI-based inflation as the segment has only a 15% weightage in the index, which is dominated by manufacturing with a 63% weightage.
Last week, Prime Minister Manmohan Singh had issued the first official warning that emergency measures need to be put in place as the weak southwest monsoon — 25% deficient this year according to the met department — is sure to cut down output from summersown crops that account for half of the country’s food produce.
Data on industrial production released on Wednesday showed a surprise 7.34% jump in factory output in June due to broader recovery in capital goods and consumer durables despite shrinking exports. This, experts believe, will lead to higher demand for raw materials and stoke inflation.
Sensex rises 498 points as recovery signs spread
Sensex rises 498 points as recovery signs spread
The Financial Express, August 14, 2009, Page 1
fe Bureaus, Mumbai
The stock market saw a widespread rally on Thursday on strong domestic and global cues. Buoyed by the surprise 7.8% rise in June factory output and the new direct tax code’s promise of an end to STT and a 5% cut in corporate tax, the market went on a steady climb, with 79.28% stocks advancing and leaving no losers on the Sensex.
Backing the rally were a statement from the Fed that the US economy is showing signs of improvement and news from the Eurozone that Germany and France have come out of the worst recession in Europe since 1945.
Foreign institutional investors pumped in a net Rs 630.94 crore into the market, taking their total investment this month to Rs 7,068.61 crore. Data released by RBI revealed that foreign investment in the April-June quarter surged five-fold to $15 billion, from $3 billion in the previous quarter, in what is seen as a vote of confidence in India’s economic recovery.
As the equity market rose, the rupee strengthened by 26 paise to 48.10/11, from its overnight close of 48.36/37.
The 30-share Sensex of the Bombay Stock Exchange (BSE) posted a solid gain of 498.33 points, or 3.32%, and closed the day at 15,518.49 points. The broader 50-share Nifty of the National Stock Exchange (NSE) surged higher by 147.50 points, or 3.31%, to close five points above the 4,600-mark.
Key Asian equity indices, too, advanced, with Hang Seng gaining 2.08%, Straits Times 1.67% and Taiwan Weighted 1.97%. But the Indian equity market remained the top gainer in the Asia-Pacific region on Thursday.
Global rating agency Standard & Poor’s raised India’s economic growth forecast by 30 basis points to 6.3% for the current fiscal, following the government’s stimulus measures and an improvement in global markets.
The flood of positive news prompted investors to square-off their short position in the derivative markets. According to market experts, institutional investors had sold heavily in the futures market last week, expecting a sharp correction on reports of a weak monsoon in India.
“The immediate trigger for the current rally is US federal Reserves statement that the US economy is improving and its decision to keep interest rate unchanged,” said Vipul Dalal, country head–broking, Elara Capital.
On the domestic side, IIP figures released on Wednesday has given a strong signal that the worst is behind us and India is on the path to a speedy recovery from the current crisis, he added.
In a note issued to its clients, Morgan Stanley said it expects further recovery in industrial output. “In fact, the IIP growth in June 2009 is highest since February 2008. While we expect sustained recovery in IIP growth, the monthly growth numbers do tend to be volatile at times and there could be some retracement in IP growth over the next 1-2 months,” it said.
Despite these positives, market is a little concerned about the monsoon deficit and the spread of swine flu in India. On a cautious note, Dalal said, “Going forward, the market needs to assess the impact of the shortage in rainfall. Moreover, if the spread of swine flu is not contained, it may start impacting commercial activities.”
HDFC PARES LOAN RATES
HDFC PARES LOAN RATES
The Economic Times, August 14, 2009, Page 1
HOUSING FINANCE MAJOR
HDFC has upped the ante for market share by reducing home loan rates by 50 basis points in the Rs 30-50 lakh segment, reports Our Bureau from Mumbai. The move comes within a week of the country's biggest bank, SBI, cutting rates by 50-75 basis points for high-value loans and offering loans up to Rs 5 lakh at a fixed rate of 8% for five years. The rates will apply only to new customers as PLR is unchanged.
HDFC slashes home loan rate
HDFC slashes home loan rate
The Economic Times, August 14, 2009, Page 8
Our Bureau MUMBAI
HOUSING finance major HDFC has upped the ante for market share in the home loan market by reducing rates by 50 basis points in the Rs 30-50 lakh segment. The development comes within a week of the country's biggest bank SBI cutting rates by 50-75 basis points for high value loans, and offering loans up to Rs 5 lakh at a fixed rate of 8% for five years.
As per the revised rates, HDFC now offers loans between Rs 30-50 lakh at 9%. The rates will apply only to new customers as the lender has not revised its prime lending rate. HDFC had last cut rates in mid-July. Since then there has not been any reduction in policy rates by Reserve Bank of India.
SBI, over the past few months, has been increasing market share in the home loan segment. SBI's mortgage loan book has grown Rs 10,076 crore in the 12 months ended May 2009, which is over 77% of the Rs 13,028 crore growth recorded by the banking industry. HDFC now wants to take advantage of the festival season spike in business.
As against HDFC's 9% floating rate, SBI offers an adjustable rate where the home loans up to Rs 50 lakh are available at of 8% for the first year and 8.5% for the second and third year. Thereafter, rates will vary with the prime lending rate.
As a part of the government's efforts to help the ailing economy, several public sector lending institutions like Canara Bank, SBI and LIC Housing Finance, among others, have unveiled competitive schemes to attract home loan seekers. Given the tough competition in the segment, private lenders like HDFC have been forced to also cut rates.
HDFC reduces rates by 50 bps for Rs 30-50L slab
HDFC reduces rates by 50 bps for Rs 30-50L slab
Times of India, August 14, 2009, Page 23
TIMES NEWS NETWORK
Mumbai: Home loan major Housing Development Finance Corp (HDFC) has cut interest rates by 50 basis points (100 basis points = 1%) for the Rs 30 lakh-Rs 50 lakh slab. The new rate for this bracket will be 9% per annum, down from 9.5% earlier, a senior HDFC official said.
Earlier, HDFC had three slabs for home buyers. It charged 8.75% per annum for loans up to Rs 15 lakh, 9% for loans between Rs 15 lakh and Rs 30 lakh and 9.5% for loans of over Rs 30 lakh. Now the mortgage finance major has introduced a new slab of loans at 9% for Rs 15 lakh and Rs 50 lakh. After this rejig, only home buyers opting for loans of over Rs 50 lakh will pay an interest rate of 9.5%. Earlier even home buyers taking loan of above Rs 30 lakh were paying at the rate of 9.5%.
The change in loan brackets are on similar lines recently undertaken by a number of other leading home finance institutions like SBI and Axis Bank where the rejig was done without changing the prime lending rates (PLR). Earlier in mid-July, HDFC had cut interest rates on loans of up to Rs 15 lakh by 50 basis points to 8.75%. Of late, the mortgage lending market has seen a spate of cuts in lending rates, with different payment structures being introduced, including adjustable rate mortgages (ARMs) where the interest rate on repayments are varied periodically based on a number of market-driven factors.
The latest move from HDFC came following an SBI decision last week to cut home loan rates further. The country's largest bank said it was giving loans at 8% in the first year, and for the next two years the rates will be 8.5% to 9% depending on size of the loan.
HDFC cuts home loan rate by 50 bps
HDFC cuts home loan rate by 50 bps
The Financial Express, August 14, 2009, Page 13
Banks and housing finance companies, including Housing Development Finance Corporation (HDFC), the largest housing finance firm in the country, have reduced their rates for loans.
While HDFC has reduced its rates by 50 basis points from 9.5% to 9% for loans between Rs 30 and Rs 50 lakh, the corporation has retained old rates for other categories of loans. The reduction is effective from Thursday, said sources.
Launching its festival season bonanza, Delhi-based Punjab National Bank (PNB) has slashed home and car loans by 50 basis points. Punjab National Bank’s campaign comes a week after SBI’s three-month-long home loan campaign, offering loans at 8%.
“Under the offer, housing loans up to Rs 30 lakh will be available at discounted rate of interest of 8.50% under fixed interest rate option (fixed for three years) across all repayment tenors, besides full waiver of processing (upfront) fee and documentation charges,” Punjab National Bank said in a statement.
The margin also stands reduced to 15% for housing loans up to Rs 20 lakh, it said. On car loans, a rebate of 0.5 % is offered to prospective borrowers under the fixed option. The offer will be valid from Friday till October 31, it added. Right now, the fixed rate of interest offered by bank is 9%.
Bank of India, which has also launched its festive offer, will charge an interest rate of 8.5% for loans ranging between Rs 30 lakh and Rs 50 lakh and 9.25% for the second year.
Similarly, for home loans ranging between Rs 50 lakh and Rs 1.5 crore for a maturity period of five years, the bank will charge an interest rate of 9.5% for the first year and 9.75% for the second year. Subsequently, it will go to floating interest rate, which is 10.25% at the moment, said M Narendra, executive director of the bank.
“As we have recently launched a festive home loan scheme, I think it would help us achieve our target. We already have a special package for home loans, under which we are offering an interest rate of 8.5% for loans up to Rs 20 lakh, which will be increased to 9.25% for the second year and 9.75% for the third year. Subsequently, it will become floating interest rate, which is 9.5% at the moment,” he said.
However, for long-maturity home loans in 10 years under this category, the bank is charging an interest rate of 9.5% for the first year and 10% for the second year.
Big city houses out of middle income group reach
Big city houses out of middle income group reach
The Times of India, August 14, 2009, Page 11
Anshul Dhamija, TNN
BANGALORE: Mumbai, the National Capital Region (NCR) and Bangalore have been found to be the most unaffordable locations for housing for India’s middle-income groups (MIGs).
MIGs, defined as households with annual incomes between Rs 3 lakh and Rs 10 lakh, are unlikely to find their desired kind of homes anywhere close to the city centre in these three metros, according to a study by global property consultancy firm Knight Frank. On the other hand, Kolkata, Pune and Chennai are seen to offer a good number of affordable locations to MIGs.
The study first looks at the factors most important to a consumer in his house buying decision and his budget, and then tries to find locations where these conditions are met. “Mumbai has the worst case scenario for affordable homes. On average, MIGs would have to stay at a distance of 45 km away from the CBD, in areas that have poor connectivity and scant infrastructure, in order to get their ideal affordable home,†says Ghulam Zia, national director in Knight Frank.
This is due to the fact that land prices in the city are so steep that even smaller size units — of about 600 sqft that are acceptable to Mumbaikars — wouldn’t be affordable to MIGs. So buyers will have to settle for places like Panvel, Virar and Kalyan.
Similarly, in NCR, due to the high cost of land, MIGs would have to look beyond Meerut and Sonepat for affordable homes.
In Bangalore, MIGs are seen to be highly concerned about connectivity to their office. “And the problem in Bangalore is that as one starts to move away from the city centre, road and other necessary infrastructure starts to deteriorate,†says Zia.
The survey found that MIGs of Bangalore preferred residential units ranging between 850 sqft and 1,050 sqft in size. Given this preference for large units, very few locations in Bangalore would be affordable for consumers in the Rs 5 lakh to Rs 8 lakh income bracket. Affordable locations include Kanakapura Road, Hebbal, Electronics City, BTM Layout and Whitefield, where it would be possible to find units costing between Rs 15 lakh and Rs 30 lakh.
However, there is seen to be no location in the city at all that can accommodate affordable homes for the income group of Rs 3 lakh to Rs 5 lakh.
PNB reduces home loan rate by 50 bps
PNB reduces home loan rate by 50 bps
Hindustan Times, August 14, 2009, Page 23
Hindustan Times, August 14, 2009, Page 23
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