That's my expression as i sit in office this Friday October 24th, a day which has been remarkable even going by the recent volatility witnessed in financial markets. Fear has now come knocking on every door, the gloom is manifesting itself across asset classes. The Yen and the Aussie collapsing, Commodities selling off across the board, Equities across Asia down between 9-12%.
The Indian market was down over 11% as heavyweights like Reliance and ONGC collapsed, each falling over 10% in a single trading session. However my worries are much much bigger. Is the structural story of India still intact? My hunch is we have started to witness the first real crack in the Indian economy, REAL ESTATE. I had mentioned about this possibility in posts on July 9th and 17th. Clearly the cracks are getting deeper. High interest rates, falling demand for housing and tight credit markets have resulted in an unprecedented liquidity squeeze for the Real Estate sector. The seriousness of the problem can be gauged by the fact that biggies like Unitech, Parsvanath and Omaxe have defaulted on repayments of loan instalments.
I believe there is now a distinct possibility of the real estate market witnessing a sharp correction - something which we Indians have been thought is inconceivable. The recent volatility has shaken up a lot of equations and beliefs, the next one could be a fall in real estate prices. Should such a thing happen, the pain for the common populace already licking their wounds from the recent market crash is going to sustain a lot longer. On the flip side, for genuine buyers 2009 is likely to be a good opportunity but then we dont like to buy things which are cheap dont we?
India is in for some testing times ahead, proactive policies from the RBI have been effective in damage control. Though they have not been able to prevent things taking their normal course, the Rupee being a case in point. I now wait and watch eagerly, because as an Analyst i have stuck my neck out and tried to vision what might happen in the near future. Whether i am right or not....only time will tell.
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