Realty
Prospects for 2014: Though there may be a further price correction in 2014, drastic falls are less likely since input costs have already increased sharply. However, price correction in residential units is expected in large cities with huge inventories.
Long-term outlook: Two events can significantly alter the real estate market — the passage of the Real Estate Bill and final guidelines on real estate investment trusts (Reits). The bill requires all approvals to be in place before the launch of projects that are 1,000 square metres or involve more than 12 apartments, and prevents developers from using money received for one project to fund any other. As for Reits, individuals can invest as little as Rs200,000 (about Dh12,140) in the real estate market, empowering the sector with new funding and allowing private equity funds and non-bank financial companies (NBFCs) to exit realty projects.
Expert opinion: “Pan-India residential real estate prices are likely to grow at 10-12 per cent, factoring in input-cost inflation and a gradual pick-up in demand,” observes Anuj Puri, Chairman and Country Head, JLL India. His colleague Ashutosh Limaye, Head of Research and REIS, says growth of rentals and capital values in the retail sector will largely remain stagnant in the near term. “No major foreign retailer has initiated the procedure for investments into India so far. If they do so post elections, it will fructify into real demand only in 2015.”
Stocks
Prospects for 2014: Most analysts in India have three sets of predictions for the year, and it is best summarised in a Reuters poll conducted in the last week of March: If the National Democratic Alliance comes into power, the BSE Sensex is expected to rally and draw further overseas funds. If the United Progressive Alliance returns to power, the index is expected to change very little or even fall. But the third option of a badly fractured verdict may result in a sell-off, or a market crash.
Long-term outlook: Analysts say they expect the BSE Sensex to rise to 23,000 by the end of June, and touch 24,500 by the end of 2014, although they expect high volatility in the next six to eight months — led by the US Federal Reserve’s tapering, US debt ceiling, and local macroeconomic indicators. Mark Mobius, executive chairman, Templeton Emerging Markets Group, recently said investors can look at 15-20 per cent annualised returns from the Indian markets over the next few years.
Expert opinion: “We expect the Indian stock market to deliver 14-15 per cent returns over the next 12 months,” Sam Mahtani, Director of Emerging Market Equities, F&C Asset Management, said in a January interview with magazine Money Today. “We also expect foreign institutional investors (FII) inflows to continue over the next few years.”
Bonds
Prospects for 2014: State-run firm Oil India raised $1 billion (about Dh3.6 billion), and State Bank of India is also set to raise $1 billion through bond sales — giving a big boost to overseas fund raising by Indian companies. Subdued sentiment, lower appetite for emerging market bonds and developments in the global markets may continue to support high yields for the Indian government bonds.
Long-term outlook: DSP BlackRock predicts a further increase in the government’s total borrowing in 2015 and 2016. SBI Mutual Fund says duration funds will be attractive only if the horizon is 18 months to two years. Franklin Templeton Mutual Fund advises investors to look at corporate bond funds that can take advantage of high yields on corporate securities, and long bond funds that offer high yields and capital appreciation.
Expert opinion: “We are asking investors to consider investing in higher average maturity funds,” says Dhawal Dalal, Executive Vice-President and Head of Fixed Income at DSP BlackRock, in his December 2013 essay. “An investor with Rs100 to invest for at least six to nine months could consider investing Rs40 to Rs45 now, and add more as yields trend higher. However, stay with quality and with funds which one can redeem easily,” he says.
Silver
Prospects for 2014: Although price forecasts for this year are markedly lower than they were for 2013, they are exceptionally and consistently uniform. Most predictions — from Barclays, Thomson Reuters, UBS and Commerzbank — place the metal at an average of $21 per ounce.
Long-term outlook: The CPM Group and Bank of America Merrill Lynch highlight the many industrial uses of silver buoying prices in the next three years. Other analysts say that silver mining costs averaged $21.39 per ounce in the third quarter of 2013, and it is highly unlikely that prices will remain below the cost of production.
Expert opinion: “No major downfall is expected in silver in 2014,” says Shiv Shrivastava, Managing Director and CEO of IGuru Research, speaking on Zee TV in January.
“Participation in silver ETF is expected to be much better as compared to gold, since storage is a big issue with small investors,” he says.
