The Hindu Business Line : Construction stocks losing ground on profit-booking

The shares of Nagarjuna Construction Company Ltd fell 0.55 per cent to close at Rs 189.95 after registering a rise of 11.44 per cent for the week. Hindustan Construction Company Ltd, closed 2.93 per cent at Rs 124.35. Ansal Properties and Infrastructure Ltd also slipped 4.74 per cent.

“Investors booking their profits has led to a fall in these stocks. There had been a sharp run up in the prices and most stocks were appreciating at a rate of 15-20 per cent for past month. When the markets are down, there will be profit booking,” said Mr Shailesh Kanani, construction analyst, Angel Broking.

Prone to volatility

The real estate sector had been prone to a lot of volatility with most realty stocks falling drastically earlier this year, due to rising interest rates. However, ever since the SEBI cleared DLF’s Rs 9,000 plus IPO in May this year, the stocks had been performing well. The good response to DLF issue was another factor that boosted the performance of real estate and infrastructure stocks.

Real estate stocks Sobha Developers and Unitech Ltd fell by 4.02 per cent and 5.21 per cent, respectively, today.

Other factors

“Stocks had run up in the last fortnight due to the good response that the DLF IPO received. Could expect a further downslide as the cement price hike would cause slight margin pressure and steel prices are also ruling firm,” said Mr Pankaj Pandey of ICICI Direct.

Even though a further decline is expected, analysts continue to remain bullish.

“Fundamentals are intact and the quarterly numbers are expected to be good. Even today, IVRCL Infrastructures and Projects bounced back. The stock fell to Rs 370 but it recovered to close at Rs 391,” said Mr Kanani.

“So far, the growth has been mainly because of price appreciation in property prices, which led to an increase in the bottom line. Going forward, it will be more of a volume growth story,” said Mr Pandey.

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