Those were the days; a Souza or Husain commanded a price for which you could buy a sea-facing apartment in the swanky neighbourhood of Worli in Mumbai. Today, you may have to toss in a small painting by Ram Kumar to clinch the deal. This is because not even the blue-chip painters have been spared by the art market crunch. “If a painting was bought in June-September 2006 and sold in the same months of 2009, the fall in prices of modern masters like V.S. Gaitonde, Tyeb Mehta, Akbar Padamsee, J. Swaminathan, S.H. Raza, M.F. Husain and F.N. Souza would be about 35-40% on an average,” says Neville Tuli, founder chairman of Osian’s. Does this mean that you can now lay your hands on the works of these masters?
Not really, unless you are sitting on extra cash (over and above your regular expenses and investments) of more than Rs 10 lakh. The good news is that even though a Raza may be out of reach, works of young and contemporary artists are available for a steal. According to Tuli, in the past one year, their valuations have gone down by as much as 70-80%. Surely a great buy, but doesn’t the extent of correction ring a warning bell about their prospects?
Mukesh Panika, director of Religare Art Initiative, doesn’t think so. “This is a fantastic time to buy, especially for first-time buyers or those looking to invest Rs 1-2 lakh. Not only are prices low, but buyers have greater negotiating power now.” However, he adds a cautionary note: “One of the biggest lessons from the slowdown is that the discerning ability is still low among both buyers and sellers. So art enthusiasts must exercise due diligence before following the advice of galleries. Many galleries have been forced to shut shop in recent times when volumes have dropped by about 60%.”
This is much like the stocks that disappear from the bourses. So similar to an equity investment, Panika advises serious research such as visiting the galleries, following the works of the artist, evaluating the infrastructure of the gallery, etc. Currently, Religare Art Initiative is aggressively promoting the works of emerging artists like Daina Mohapatra, Jyoti Ranjan Jena and Avishek Sen, whose works cost Rs 2-5 lakh (see photographs). “But the investment horizon should be at least three years, so that, if required, a turnaround of the risk is possible,” says Panika.
Tuli is more circumspect about emerging artists. He suggests buying them primarily for the “love of art” as they would take almost 20 years to significantly appreciate in value, if at all. However, those who had bought the A-listers four to five years ago have nothing to worry. “If the work by a master was bought in 2004, the returns would still be 20-25% per annum,” says Tuli.
Obviously, the bursting of the art bubble has resulted in opportunities galore. Already, galleries like Saffronart are reporting that the collectors are returning to pick up Indian modernists that are available for a bargain. Newbies aren’t far behind. In the second edition of the Indian Art Summit held in August this year, about 30-40% of the sales were to first-time buyers. So if you are feeling arty, go and invest. Just remember the slowdown lesson summarised by Andes Petterson, managing director of Arttactic: “Focus on quality, rarity and artists who will stand the test of time. Then you won’t go wrong.”
Credibility meter for research reports
– By R. Sree Ram
How many times have you been told to conduct research before buying stocks? To minimise the chances of wrong bets, one must carry out self-study and not depend on tips. The question is, how dependable is your source of research? Invariably, it involves going through myriad reports released by research units of brokerage houses. If the main objective is to generate trading volumes and business, the reliability of the recommendations comes under the scanner. Thankfully, the accuracy of these reports can be assessed over time by following the performance of the stocks that are analysed.
The research arm of ICICI Securities has conducted an interesting study along these lines. It screened the BSE 100 companies to find out the most and the least preferred stocks by analysts across research houses.
To qualify, a stock had to be covered by at least 10 analysts. The most preferred stocks were those that received the maximum buy ratings, whereas the stocks with the most sell ratings made it to the list of the least preferred stocks.