 Not so long ago, there was no surer way to get rich in a hurry than to bet on Indian stocks. Millions of Indians were finally clawing their way into the middle class, creating a new domestic consumer market, while companies in Bombay and Bangalore emerged as global players in everything from outsourcing to pharmaceuticals. Investors went crazy. India's main stock index, the Sensex, has more than tripled in the past three years.
How hot has India been? Foreign institutional investors poured $30 billion into the Indian market in three years-double the amount they had invested in the previous decade. An Indian student at Harvard Business School told TIME that one of the U.S.'s best-known hedge funds had given him $5 million to invest in Indian stocks-never mind that he hadn't yet graduated.
But, after peaking in early May, the Sensex plunged 30% in a matter of weeks. With stock prices down, is this the moment to invest in what many believe will be the world's fastest-growing economy over the next 50 years?
The long-term picture remains sunny. "It's like China maybe 15 or 20 years ago," says Marc Faber, a renowned emerging-markets investor based in Hong Kong and Thailand. And gaps in development provide opportunities for growth. India's infrastructure and housing are ripe for improvement, says Faber, and there's enormous scope for the building of malls and supermarkets.
India also has a younger population than any other major country. According to Ridham Desai, Morgan Stanley's head of Indian equities research, about 125 million Indians will join the workforce in the next decade, and they will be key to the country's growth. Foreign firms will hire legions of them to drive down costs, and their prosperity will fuel demand for stylish clothes, cars and other baubles. Thanks to this demographic advantage, "India will grow faster than the rest of the world", says Desai.
"Now is the time," says Jon Thorn, a portfolio manager at India Capital Fund. "You need to buy when there are moments of panic." Savvy investors, he says, should stash some of their assets in Indian stocks or funds for the long haul. Faber is even more bullish. "If someone put a gun to my head and said, 'You have to put all your money in India or all of it in the U.S.", he says, "I'd choose India."
—Time Magazine, 24 June.
Tightening norms on property loans
The BDA, banks and stamps and registration department have stepped in to curb increasing speculation in the property market and the resultant mushrooming of illegal layouts.
The BDA has identified 108 illegal layouts, predominantly coming under the city municipal councils and town municipal council. BDA has written Demi-Official (DO) letters to major banks cautioning them against sanctioning property loans in unapproved layouts.
Banks have also tightened lending norms and are now focusing on documentation. They say an approved building plan is a must now. Property documents are being scrutinised more vigorously.
A mandatory clearance from the Union Ministry of Environment for projects worth more than Rs 50 crore or which have more than 5,000 occupancies or discharge more than 50,000 litres of sewage is needed for layout approval.
Sources said the runaway increase in property prices has also put builders on guard and many have turned cautious when it comes to bulk booking.
—The Times of India, 26 June.
Real estate boom in India
According to a Pricewaterhouse Coopers' report on global real estate, in India's fast-growing economy, real estate has emerged as one of the most appealing investment areas for domestic as well as foreign investors.
Apart from a young crowd of well-earning Indians, the real estate sector will continue to derive its growth from the booming IT sector, since an estimated 70% of the new construction is for the IT sector, the report reveals.
Property development has surged in India since 2002, helped by an annual doubling in demand for office space as foreign firms invested
into the country's information technology sector and call-centres in Mumbai, Delhi and satellite towns, Bangalore and Hyderabad. Other than the big cities, as the IT sector expands to second and third tier cities across India, the real estate boom will follow close on heels.
—DNA, Mumbai, 7 February
New stamp duty and registration fees
- For property situated within the limits of Bangalore Corporation and Bangalore Development Authority
a) Stamp Duty 7.50% + Surcharge 0.90% (8.40%)
b) Registration Fee (1%)
Total: 9.40%
- For the property situated within the City Municipal Corporation limits
a) Stamp Duty 7.50% + Surcharge 0.98% (8.40%)
b) Registration Fee (1%)
Total: 9.98%
Housing Loan Schemes
Indicative
Equated Monthly Installment
for every Rs 1 lakh of loan* |
Period up to
(in years) |
5 |
10 |
15 |
20 |
Floating Rate of Interest |
9.5% |
9.5% |
9.5% |
9.5% |
EMI |
2,101 |
1,294 |
1,045 |
933 |
Fixed Rate of Interest |
10.75% |
10.75% |
10.75% |
10.75% |
EMI |
2,162 |
1,364 |
1,121 |
1,016 |
As on 1 July 2006. *Conditions
Apply
- Loan amounts
that can be availed depend on the housing finance institution
- Loan amount limit
depends on the income of the applicant
- Security of the
loan is the first mortgage of the property to be financed
- Loans can be
availed from leading financial institutions
- Interest rates
and EMIs are subject to change without notice, check
with the financial institutions for prevailing interest
rates
- Calculations
are based on loan amount of Rs 10 lakh onwards
|
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