Readings: Interest rates, Realty blues, Munger on sectors
- Business Standard: Interest rates set to go up soon
Banks may soon raise lending as well as deposit rates with the Reserve Bank of India increasing repo rate, or the rate at which it lends to banks, by 25 basis points to 8 per cent. While trying to rein in the runaway inflation, the central bank, however, left the reverse repo rate unchanged.
“Most of us change interest rates on the first day of the month. So, we at HDFC will look at it in the month of June and it will only be effective on July 1. We have a couple of weeks to take a view, looking at what our competitors are doing, the liquidity in the market and our margins because we have to protect them”.
Even as realty stocks are quoting at huge discounts to their issue prices (DLF at Rs 479.85 against Rs 525 issue price; and Omaxe, Parsvnath and Puravankara at 40-50% discounts), realty is suddenly looking scary for investors.
“In Bandra and Khar,” he says, “investors are willing to sell at Rs21,000-15,000 per sq ft as against the prevailing rates of Rs23,000 and Rs18,000.”
. . . as companies follow the percentage completion method for recording sales and profits, rising input costs may lead to write-downs in future if costs incurred are higher than estimated.”
Someone please come up with real estate price indices for India!
- Daily Wealth: When This Investor Speaks, Buffett Jumps
. . . a reporter asked Charlie how he felt about regional banks. Charlie replied, “For somebody who’s very diligent, you’ve identified a prospecting territory that has some promise… The questioner is on to something.”That’s when Buffett told the crowd it was the most bullish recommendation he’d ever heard from Charlie.
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