Lower Interest Rates and Weak Gold Prices Lead Festive Shopping Fever

Diwali time in India, is what Christmas is to the west. Retail spending is normally at a high. Diwali, the festival of lights, falls on October 20th this year and this report captures the pulse.

Consumers have a lot to celebrate this festive season. The usual sale and price offs from every kind of retailer selling apparel, jewellery, consumer electronics and automobiles, are on, as is every year. In addition, to make festive spending easier on the wallet, several banks have dropped interest rates on consumer loans.

Banks, traditionally, have used the festive season to increase awareness of their retail products. Demand for housing loans, auto and personal loans go up during this period by almost 25% and banks cash in on the demand. This year is not different, but definitely better. Some banks have announced rate cuts of up to 50 basis points on retail loans availed of before October 31st. Punjab National Bank, Stat Bank of India and Central Bank are some of the banks that have announced rate cuts.

Gold prices have also dipped slightly to further push up the normally heavy demand during this season. Banks are also offering gold coins with images of gods and goddesses for corporate as well as personal gifts. The weak prices have sparked off a gold rush across the country even before the Shraddh Paksh (considered an inauspicious period amongst many communities) was over. Several traders believe this is a huge change and people are buying gold as investment in anticipation of high prices during the festive and marriage seasons.

A month long shopping festival "Delhi Diwali Shopping Festival" was flagged off on September 21st until October 20th bringing together 1200 retail outlets, over 10 malls and 12 major markets. Other participants include 700 Residents’ Welfare Associations and 200 schools from across the capital city, which is soon being labelled the shopping capital of the country. The mega event is expected to generate some recall value as well as target the NRI visitors who typically visit India during this season.

http://www.hindu.com/2006/09/22/stories/2006092210550200.htm
http://www.thehindubusinessline.com/2006/09/23/stories/2006092305170100.htm
http://www.rediff.com/money/2006/sep/23loan.htm
http://www.dnaindia.com/report.asp?NewsID=1053098