Outlook Money Best Long Term Stock Picks - Real Estate Price Correction

Economic statements:

1. India's GDP growth will be around 7-7.5% - PM Manmohan Singh. Centre for Monitoring Indian Economy (CMIE), estimates that GDP growth will be around 8%. Whom you believe?

2. Kamal Nath: We need to pump Rs 25,000 crore in the next 6 months into infrastructure without worsening fiscal deficit.

3. Real Estate prices in India will further correct by 50% - SBI Chairman O.P. Bhatt.,

** People who bought homes only for investments in Indian Metro cities would feel pinch of recession, Most of them are young Indians from emerging sectors like IT/Aviation and real estate itself. IT employees getting salaries in range of 40K to 50 K in their twenties, have bought homes in their late 20's. The average age of home buyer in India is at it's lowest in history. (Somewhere betwn 28 to 32). We have seen in past month what happened to aviation sector. For IT, It will take some more time. You would hear bad news for IT companies in next 3 - 6 months. Most of the MNC companies, allott budgets in the month of December. And december has yet to come. When it would happen, it would result in IT companies getting fewer projects. Young children staying at their parents home bought flats with EMI upto 30 to 40% or more of their salaries. Now in recession period if their salaries get a cut or worst, if they loose a job, what would happen? They will default on EMI's n would try to sell the property to encash the profit if they have or would try to minimize the losses. So if the sellers are more in property market than buyers what do you think would happen? Same thing that happens in stock market, when sellers for a stock are more than buyers!! Lower circuit or in simple words, fall in prices. And you have seen what has happened in stock markets in past few months. The rule of demand-supply is simple, more the supply than demand, price has to lower and so will !!

**Further, do not forget all the commodity prices have corrected steeply, so has the steel price. Steel is the major part of any construction and all the property builders have increased the property rates due to higher steel and cement prices. Now that the steel is available at more than 50% of the rates just before 3 months, don't you think property builders should decrease the property prices? The land has become cheaper. If they are not, they are looting you and you are the biggest idiot if you are buying the property at present rates!! :) Don't get angry but this is the only truth. Most of the developers have flats builtready to sell and they had not sold them in order to make people pay higher prices for ready apartments. Have you seen how these developers behave and rule when they sell a flat to you? Most of the times they are so rude and shrude that they make you feel like a begger in front of them.

**This is the lesson for all of them. They forgot in past few years that Customer is king. Singh can not always be the King!! DLF is nosediving towards bottoms in terms of earnings. They are begging Hyderabad authority to allot only the part of land for which they had paid money in past. They do not have money to complete the transaction. They do not few hundred crores more to make the complete payment and DLF's K.P. Singh had raised few thousand crores from public thru the route of IPO and was dreaming to become India's richest by looting common man.These are the people who sent the land prices to ride the moon. They should not expect any bail out package from Indian government. If Government did so, it would be again wastage of money collected from honest tax payers like you and me.

4. Only 0.25-0.50% of the country's population lost money in stock markets and real estate and that should not be the reason to panic- SBI Chairman. How ignorant he is. Does he know about 80:20 rule? How only few people always influence consumption and economy. It's not about number of people but amount of money.

5. Indian financial crisis may end in 2 years – Bakul Dholakia, former director, IIM-A.

6. Inflation will come down to near zero by March, 2009 - Edelweiss CEO Rashesh Shah.

7. "Global trade will decline for the first time in 27 years" - World Bank President Robert Zoellick.

8. "We will become bankrupt without a bailout package or merger" – General Motors.

Financial statistics:

1. CII: Indian GDP growth rate will be around 7.4-7.8%. CII's earlier estimate was 8.3-8.6%. We will see further reduction in estimates by January. My estimate for current ear is around 7%. India's GDP growth in the next year would be around 6%.

2. Estimates: US retail sales probably fell in October by the most since the 2001 recession, Bloomberg Survey. Actual report will come out on November 14.

3. 19 US banks failed in 2008 and more will fail in the coming months.

4. Indian exports will by 20% in FY2008-09 and fail to achieve $200 billion target. Sectors that will be affected are Textiles, apparel, gems and jewellery, diamonds, brassware, handicraft and leather.

5. The number of employed Asians in America fell to 68,70,000 in October from 69,04,000 in September.

6. 100% of the world GDP growth will come from emerging countries. Most of the developed countries will contract in 2009.

Positive Stock market news:

1. Lupin will launch new cardiac drug in India. Cardiac drug market in India is around Rs 3,600 crore.

Negative stock market news:

1. OPEC nations are planning for cuts in output to stabilise crude oil prices.

2. HDFC Bank lodged a FIR against PNB for bungling Rs 7.9 crore.

3. Reliance Retail will shut down some stores and restructure its business. Big TV DTH CEO quitted. Retail sector will face hard time in the coming months due to fall in domestic consumption.

4. Bajaj Auto slowed production due to fall in demand and piling up of inventories.

Global recession news:

1. Britain: 8.8% individuals and 10.5% corporations declared insolvent in the third quarter in England. This is 26% high over previous year and is expected to reach 50% high by the end of fourth quarter.

2. USA: German logistics giant Deutsche Post will announce 20,000 layoffs in America. Another 20,000 jobs will be lost in partners companies. Shocking news!

3. More than 3 lakh travel and ticketing agents will lose jobs as Airlines stopped paying commission.

My views on OM stock picks: Outlook Money magazine in the latest issue picked 8 stocks for accumulation which will give good returns for long term investors.

1. Bank of India: Best PSU Bank for investment. SBI is the next best stock.

2. Titan Industries: Wonderful performance in the last quarter.

3. HDFC Bank: One of the "best 7 banks in the world". Axis bank is another option.

4. KS Oils: Fastest growing company in the safe business.

5. Mphasis: Best stock in the IT sector. Wonderful performance in the last quarter. Geometric and Geodesic are other options.

6. Bharti Airtel: Good stock but large FII holding is a concern. They may exit if things deteriorate for Telecom sector.

7. Indraprastha Gas: Conservative stock like GAIL. 2010 Commonwealth games in Delhi is a huge boost along with Government's pollution control efforts.

8. Emami: I am not tracking it.

Click here to read detailed report of these companies Here.
Click here to read Outlook Money stock picks.

Good article:

1. Why one should bet on China?

Financial jargon: What is LIBOR?

LIBOR is the London Interbank Offered Rate, a measure of the rate that banks assess other banks for loans. LIBOR rises mean things are bad. ICICI Bank recently faced problems in this aspect. Confidence is crucial in financial system.

Obama and Outsourcing: I failed to understand the logic behind the positive statements on "outsourcing" and why they are underestimating a tough leader like Barack Obama. He will act in a ruthless manner in creating jobs for Americans. If imposition of taxes on outsourcing companies will create jobs for Americans, he will just do that.

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