Impact of Housing Finance Scam :

With scam after scam shaking the Indian stock market, many investors are looking for direction to wade through troubled waters.

Our view on this Housing finance scam in particular is:

(1) The charge sheet by CBI on LIC Housing and other PSU banks are against individuals like CEO, Independent directors etc and not the company as such.

(2) And it is a case of bribery. The case of scam is yet to be established, though media is lobbying for it.

(3) The main beneficiary of housing finance is the borrower. Here it is the Real estate companies.

(4) As a result, the loan norms may be tightened which is less likely to affect a housing finance company or housing loan sector as such, along with probable hike in interest rates for provisioning of bad debts.

(5) Whereas, for a Real Estate developer (who is the actual accused in this CBI report) and ofcourse the small borrowers (purchaser of property), this tightening norms along with allied stringency is likely to be a huge negative.

AS a result we expect the construction, contracting, housing and realestate sector is to be badly hit. But for that the market is likely to remain neutral.

Instead of panicking, investors can make use of this panic to buy stocks at attractive, cheap price. With good monsoon across India, many companies are likely to present good results in January. Hence this is a golden opportunity to make prudent investment.