Real Estate Intelligence Service, Monday, December 07, 2009

Deepak Parekh to step down as HDFC chief this month

Deepak Parekh to step down as HDFC chief this month
The Economic Times, December 05, 2009, Page 4

Our Bureau MUMBAI

DEEPAK Parekh, whose name has been synonymous with India’s largest mortgage company, HDFC, will cease to be the chief executive of the corporation from December-end. The company on Friday formally announced the succession of Keki Mistry, vicechairman and MD, as chief executive and joint MD Renu Sud Karnad as managing director for a five-year period from January 1, 2010.

Although Mr Parekh would continue to be chairman, he has indicated that he would be spending lesser time in office in the day-to-day running of the company. “Mr Deepak Parekh, chairman & CEO of HDFC, after 31 years of which 16 years were as chairman, has decided to step down from his executive position. He will continue as the non-executive chairman of HDFC, which is the holding company for its group ventures,” a statement issued by the corporation said. The group ventures include HDFC Bank, HDFC Standard Life, HDFC Ergo General Insurance and HDFC Mutual Fund.

The corporation’s board has also approved the elevation of V Srinivasa Rangan, senior GM & chief treasurer, to the rank of the executive director of the corporation for five years.

Mr Mistry joined the corporation in 1981, has served on the company’s board for 16 years. He has worked in various positions and now would be responsible for the overall functioning of the corporation. Ms Karnad had joined the corporation in 1978, and has been on the board for nine years. She will continue to be responsible for the operations, human resources and communications functions of the corporation.

Mr Parekh’s stepping down will be an inflection point for HDFC as he is credited with building the institution which today enjoys a market capitalisation of Rs 77,000 crore. Besides heading the home finance company, Mr Parekh spearheaded the group’s ventures which have gained from his personal equations with industry, policymakers and investors. One reason for HDFC’s impeccable asset quality, despite the stress in real estate, according to insiders, is Mr Parekh’s deep understanding of the construction industry. It is also because of Mr Parekh’s stature in the international market that big names globally have been willing to pay top dollar to partner with HDFC for a variety of businesses, say insiders. Indeed with close to threefourths of its shares held by foreigners, the comfort level of the international investors is significant for HDFC.

Mistry is new HDFC CEO

Mistry is new HDFC CEO
The Financial Express, December 5, 2009, Page 1

fe Bureaus, Mumbai

HDFC vice-chairman and managing director Keki Mistry would be the new CEO of the corporation after Deepak Parekh steps down on January 1, 2010, after serving the country’s largest mortgage lender for 31 years.

Parekh, who has been heading HDFC for last 16 years of his 31 years of service with the corporation, would continue to be the chairman of the organisation, albeit in a non-executive capacity.

Mistry would be re-designated as the vice-chairman and chief executive officer with effect from January 1, 2010. Renu Sud Karnad, currently the joint managing director has been appointed as the managing director of the corporation for a period of 5 years.

Parekh has been appointed as an additional director of the corporation and shall hold the office as such up to the date of the next annual general meeting of the corporation.

Speaking to FE Mistry said, “I do not foresee a further correction in the real estate prices in the metro cities. Even if the interest rates rise, I do not anticipate a fall in demand for affordable homes as long as Indian economy continues to do well.'' Promoting affordable housing would top the agenda Mistry said. V Srinivasa Rangan, senior general manager and chief treasurer, has been appointed as the executive director of the corporation for a period of five years.

India to return to 8-9% growth in 1-2 years: Zoellick

India to return to 8-9% growth in 1-2 years: Zoellick
The Economic Times, December 05, 2009, Page 7

Our Bureau NEW DELHI

INDIA could return to a higher growth trajectory of 8-9 % in two years, but it needs to invest more in infrastructure for sustaining such growth, World Bank president Robert Zoellick said on Friday.

Winding up his four-day visit here that included meetings with prime minister Manmohan Singh, finance minister Pranab Mukherjee and other key government functionaries, he said: “India has emerged from the economic crisis with a clear vision of what it will take to accelerate back to earlier growth rates and beyond”.

The country’s 11th five year plan ending in 2012 has set a growth target of 9%. However, GDP growth slipped to 6.7% in 2008-09, after three years of over 9% growth, in the aftermath of the global crisis.

The strong fiscal and monetary policies of India had helped counter a decline in exports and withstand some of the external shocks from the food, fuel and financial crisis, he said. He added the World Bank would look at giving assistance to large consolidated projects rather than individual ones.

“What we are now trying to do is see if we can have some billion-dollar- plus interventions to try to support the reforms not only financially but at developing institutional capacity and figure out how we can connect other sources of funding, including some private sector funding from India and abroad,” he said.

Mr Zoellick announced a support of $ 1 billion for helping clean the Ganges. Earlier, the finance ministry said the World Bank is likely to triple its lending to the country to $US 7 billion this year. The World Bank has expressed interest in the development of the Eastern corridor on the lines of the Western corridor for which the governments of India and Japan are working together. “I saw increased discussion about longer-term investments in railway production including in the Eastern corridor and so I wanted to suggest that we might be able to partner with India on these issues and there has been a receptivity there,” Zoellick said.

On giving more voice to developing countries, he said the Bank would like to achieve a closer parity of towards 50:50 in terms of developed and developing countries.

Dubai will not hurt India, says Zoellick

Dubai will not hurt India, says Zoellick
The Financial Express, December 6, 2009, Page 1

World Bank Group president Robert Zoellick on Saturday said the Dubai debt crisis is manageable and it would not affect India.

"I personally think that the Dubai financial problem would be contained and is manageable. I don't think it to have an effect on Indian markets," he said. Zoellick was talking to reporters after a meeting with policy makers, including Reserve Bank governor D Subbarao and Planning Commission deputy chairman Montek Singh Ahluwalia. Though India would not be hurt, he said events in Dubai, due to the nervousness in financial markets, might prompt a second or a third look at investments in emerging markets.

World Bank Group President Robert Zoellick on Saturday said the Dubai debt crisis is manageableanditwouldnot affectIndia.
"I personally think that the Dubai financial problem would be contained and is manageable. I don't think it to have an effect on Indian markets,"Zoellicksaid.

Zoellick was talking to reporters here after a meeting with policy makers, including RBI governor D Subbarao and Planning Commission deputy chairman Montek Singh Ahluwalia.

Though India would not be hurt, he said events in Dubai, due to the nervousness in financial markets, may prompt a second or a third look at investments in emerging markets. About the meeting, to understand how India is coming out of theglobalfinancialcrisis,he said the policy makers feel the stimulus has helped the economy . "I got a general sense that they feel that the fiscal expansion has played an important role," Zoellick said on the final day of his four-dayvisittoIndia.

"And, overtime as they (India) return to growth they are also going to try to get some fiscal consolidation,"headded.Speakingon the priorities of Indian policy makers, he said they are more interested in longer term investments like foreign direct investment rather than portfolio investment. Foreign Direct Investments can help India connect to the international economy , Zoellick said, addingheisimpressedatthe riseinFDIinthecountry .

"One of the interesting observations that was made at the meeting was that the FDI numbers have gone up and that's a good sign," he said. Zoellick said the critical things discussed at the meeting included looking ahead and seeing what kind of urban strategy, infrastructure or water strategy could be pursued.Finally, the World Bank chief said he is emboldened by the Indian recovery and the growing stature of the country helping global stability . "I have beenencouragedhowIndia has come back quickly in this crisis ... I think that it can play an important role not only for the people of India but in the international economy,"hesaid.

No Impact of Dubai crisis on India: Zoellick

No Impact of Dubai crisis on India: Zoellick
Business Standard, December 6, 2009, Page 2

BS Reporter / New Delhi

The World Bank chief meets top policy makers.

The financial crisis in Dubai will not affect India but may prompt investors to take a relook at emerging markets, according to World Bank President Robert Zoellick.

“I do not think it will have an effect on Indian markets,” Zoellick told reporters after a meeting with a select group of policy makers on the final day of his four-day visit to India.

He said though the financial problems in Dubai were manageable, they might prompt a second or a third look at investments in emerging markets due to the nervousness in the financial system.

Zoellick, who met Reserve Bank of India Governor D Subbarao, Planning Commission Deputy Chairman Montek Singh Ahluwalia and Department of Industrial Policy and Promotion Secretary Ajay Shankar, among others, said the meetings helped him understand how India was coming out of the global financial crisis.

“I got a general sense that they feel the fiscal expansion has played an important role… As they return to growth, they are also going to try to get some fiscal consolidation,” Zoellick said.

He said Indian policy makers preferred longer term investments like foreign direct investment to portfolio investments as the former could help the country connect to the international economy. “One of the interesting observations made at the meeting was that FDI has gone up and that is a good sign.”

This was Zoellick’s second visit to India in the last two years as the head of World Bank. During the visit, he met Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee. He also made a day-long trip to Tonk district in Rajasthan where met Chief Minister Ashok Gehlot

Dubai financial problems manageable, says Zoellick

Dubai financial problems manageable, says Zoellick
The Hindu Business Line, December 6, 2009, Page 3

Stresses on importance of trade, need to resist protectionism.

Our Bureau, New Delhi

India need not entertain any worry about the recent debt crisis of Dubai World adversely impacting its market, the World Bank President, Mr Robert B Zoellick, said here today.

“I personally think that the Dubai financial problems will be contained and manageable. I don't think it will have an effect on the Indian market,” Mr Zoellick told reporters after a meeting with key Indian policy makers including the RBI Governor, Dr D. Subbarao, and the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia.

Late last month, Dubai World, the State-owned conglomerate that spearheaded Dubai's growth, had asked creditors of its flagship property firms — Nakheel and Limitless — for a six month repayment freeze on some of its debt. This had shaken global markets and raised apprehensions here that the debt crisis may spillover to India.

“I think because of the nervousness in financial markets, the events in Dubai caused everybody to take a second or third look at fragilities,” Mr Zoellick noted.

On his meeting with top Indian policy makers this morning, Mr Zoellick said that they discussed critical issues of infrastructure, budgetary issues, and the changes in business models that one sees coming out of the Indian economy.

The World Bank Group President said that he was encouraged by India's rebound in the current global economic downturn. Mr Zoellick said that he stressed the importance of trade and the need to resist protectionism.

“We also talked about the challenges of low-income States, about the G-20 process and how India can play a role with some of the global economic challenges of the day,” he said.

Asked whether he got a sense of the timing of exit (on stimulus measures) from Indian policy makers, Mr Zoellick said, “I got a general sense that they feel fiscal expansion has played an important role and over time as they return to growth they are going to get fiscal consolidation.”

The meeting observed that Foreign Direct Investment into India had gone up this year, which Mr Zoellick pointed out was a “good sign”.

“I get that the principal interest of policymakers (in India) is to get longer term investments not portfolio investments so much as foreign direct investments that can help them connect to international economy”, he said.

He said that the main purpose of his visiting India was to listen and learn about how the country was coming out of the global financial crisis and also its growth strategies for future.

Allow smooth passage of FII funds: Bhave

Allow smooth passage of FII funds: Bhave
The Economic Times, December 07, 2009, Page 1

Shaji Vikraman & Santosh Nair MUMBAI

NET foreign fund inflows into Indian equities is nearing a record high, but concerns of restrictions on portfolio flows may have been exaggerated. Securities and Exchange Board of India (Sebi) chairman CB Bhave is of the view that unless foreign portfolio investors are allowed entry and exit without being hobbled, it would be difficult to attract foreign investments into equities. In an interview to The Economic Times, Mr Bhave said the massive inflows this year have to be viewed in the context of net outflows in 2008 and as such, net dollar inflows were within a manageable limit.

“We can only ensure that the necessary KYC (know your client) norms have been adhered to. But we can’t say only that capital is allowed which will not go out in two months,” said Mr Bhave.

With more portfolio investors coming through the front door, or in other words, opting to register directly, he also doesn’t see the need, at least in the near term, to tweak the participatory note, or PN, regime. PNs are derivative instruments which derive their value from the underlying shares of Indian firms and are issued by foreign portfolio investors to overseas investors or entities who may not wish to invest directly. Mr Bhave, however, said those FIIs that issue PNs without following proper KYC norms would be penalised.

Topping the list of priorities for the capital markets regulator is reducing the time taken to list after the issue closure to seven days from the current 20. The regulator is also trying to extend the application supported by blocked amount (Asba) facility to institutional investors and high net worth individuals. This would then speed up the process to make it mandatory for institutions to pay 100% margin while applying for IPOs. “Extension of the Asba facility and cutting the time taken for listing are key since institutional amounts are huge and if you keep them blocked for a considerable time, there will be issues,” said Mr Bhave.

The regulator, he said, was also considering tightening the norms for mutual funds to lower concentration of risks owing to a few investors holding a large chunk of investments, and to ensure that no single investor holds more than 25% in a single scheme. Since October 2008, Sebi has put stringent rules in place, including abolishing the entry fee, or the load for investors in mutual funds, and other measures aimed at preventing a systemic crisis.

On the contentious issue of extension of trading hours, the regulator is content to play the role of a facilitator rather than taking a view. “Let the industry decide, we are not getting into it,” the Sebi chief said.

Eight-yr cycle: Mkt may hit 21k jackpot in ’11

Eight-yr cycle: Mkt may hit 21k jackpot in ’11
The Economic Times, December 06, 2009, Page 1

Analysts see stock market in consolidation phase; anticipate some correction over next 12 months

Aman Dhall NEW DELHI

IF YOU are a retail investor looking to make money on Dalal Street, you may have a little over 12 months left to get your portfolio right. The Indian stock market is in the midst of a consolidation phase that will set the tone for the next bull run which, according to chartists, is set to begin in the first half of 2011.

The technical analysis, based on a classical eight-year time cycle that the market has followed since 1984, projects the Bombay Stock Exchange (BSE) benchmark Sensex to break the 21,000 barrier by early 2011 and embark on a bigger bull run. “The current rally is an upward leg of the larger consolidation pattern,” said Anup Bagchi of ICICI Securities. “In 2010, the Sensex will fluctuate in the range of 12,500 and 21,000. The next major peak is expected in 2016.”

The analysis shows that the equity market tends to be range bound after doubling from the bottom. For instance, after the 13-month bear phase witnessed during 1992-93, the Sensex jumped more than 100% from 1,980 to 4,643 before going into a consolidation phase for almost four years. The larger bull run, which started in 1998, then took the Sensex beyond the 6,000-mark in Feb 2000 before markets were spooked by the bursting of the tech bubble.

The next cycle from 2000 to 2008 also witnessed a similar trend. After a threeyear bear run between 2000 and 2003, the Sensex went up by more than 100% from the 2,900 mark to 6,250, which was followed by a correction of almost 33%. This next bull phase started in 2005.

Going by this theory, analysts expect the markets to see some correction over 12 months. “It could correct up to 11,000 at some time. There are, in fact, likely to be large swings in both directions,” says Rohit Srivastva, fund manager at Sharekhan.

A SundayET article dated January 4 had, citing technical analysis, predicted the market stabilising from April after bottoming out in February/March following the completion of a 13-14 month downtrend.

Ashu Madan, president of equity broking at Religare Securities, believes the Indian stock market is already under a different kind of bull run. “We may be in a consolidation phase but the euphoria has begun to build. For retail investors, this period leading to the bull run will be a litmus test. They should not let their learnings of last market crash act as a baggage now,” he says.

Low readings on India Volatility Index (VIX) too show that the overall perception among investors about market risk has reduced. The VIX is currently trading in the mid 20s, which is in sharp contrast to the same period last year when it was trading in the 50s.

Over a longer period of time, analysts anticipate the markets to touch 25,000 levels by 2012. “Going by the cycle, the Sensex should touch 32,000 levels by mid 2014,” says Sandeep Wagle, chief technical analyst at Angel Broking.

Eight-yr cycle: Mkt may hit 21k jackpot in ’11

Eight-yr cycle: Mkt may hit 21k jackpot in ’11
The Economic Times, December 06, 2009, Page 1

Analysts see stock market in consolidation phase; anticipate some correction over next 12 months

Aman Dhall NEW DELHI

IF YOU are a retail investor looking to make money on Dalal Street, you may have a little over 12 months left to get your portfolio right. The Indian stock market is in the midst of a consolidation phase that will set the tone for the next bull run which, according to chartists, is set to begin in the first half of 2011.

The technical analysis, based on a classical eight-year time cycle that the market has followed since 1984, projects the Bombay Stock Exchange (BSE) benchmark Sensex to break the 21,000 barrier by early 2011 and embark on a bigger bull run. “The current rally is an upward leg of the larger consolidation pattern,” said Anup Bagchi of ICICI Securities. “In 2010, the Sensex will fluctuate in the range of 12,500 and 21,000. The next major peak is expected in 2016.”

The analysis shows that the equity market tends to be range bound after doubling from the bottom. For instance, after the 13-month bear phase witnessed during 1992-93, the Sensex jumped more than 100% from 1,980 to 4,643 before going into a consolidation phase for almost four years. The larger bull run, which started in 1998, then took the Sensex beyond the 6,000-mark in Feb 2000 before markets were spooked by the bursting of the tech bubble.

The next cycle from 2000 to 2008 also witnessed a similar trend. After a threeyear bear run between 2000 and 2003, the Sensex went up by more than 100% from the 2,900 mark to 6,250, which was followed by a correction of almost 33%. This next bull phase started in 2005.

Going by this theory, analysts expect the markets to see some correction over 12 months. “It could correct up to 11,000 at some time. There are, in fact, likely to be large swings in both directions,” says Rohit Srivastva, fund manager at Sharekhan.

A SundayET article dated January 4 had, citing technical analysis, predicted the market stabilising from April after bottoming out in February/March following the completion of a 13-14 month downtrend.

Ashu Madan, president of equity broking at Religare Securities, believes the Indian stock market is already under a different kind of bull run. “We may be in a consolidation phase but the euphoria has begun to build. For retail investors, this period leading to the bull run will be a litmus test. They should not let their learnings of last market crash act as a baggage now,” he says.

Low readings on India Volatility Index (VIX) too show that the overall perception among investors about market risk has reduced. The VIX is currently trading in the mid 20s, which is in sharp contrast to the same period last year when it was trading in the 50s.

Over a longer period of time, analysts anticipate the markets to touch 25,000 levels by 2012. “Going by the cycle, the Sensex should touch 32,000 levels by mid 2014,” says Sandeep Wagle, chief technical analyst at Angel Broking.