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Our Bureau

Mumbai, Sept. 14

The realty index of the benchmark BSE went up by 1.59 per cent, thus continuing the upside swing on the sixth consecutive day.

The rally continued partly because Unitech has been included in the National Stock Exchange’s 50-share Nifty. After the inclusion of Unitech, the weightage of realty sector will be about 1.8 per cent in the Nifty and so fund managers will allocate their funds accordingly, leading to demand in these stocks.

Unitech, the first realty firm to be included in the Nifty, will replace Mukesh Ambani group firm IPCL from October 5. Unitech’s inclusion in the S&P CNX Nifty will follow IPCL’s amalgamation with Reliance Industries and its subsequent suspension of trade.

According to a Motilal Oswal research report, “Unitech is shifting focus to emerging profitable segments such as premium apartments, commercial offices, retail and hotels, which enjoy higher yields and have significant entry barriers. In FY-08, the company intends to commence construction on 10msf of ’Grade A’ retail mall space and roll out plans for the hotel segment encompassing 4,800 rooms,”

The rise in realty stocks is partly news driven but on the whole the sector looks promising, according to some analysts. There is revived interest in this sector they feel.

Some other realty shares such as Akruti Nirman rose 2.82 per cent, DLF surged 3.18 per cent to Rs 664.80 and HDIL was up 2.05 per cent.

“Although the residential sector growth has slowed down, the commercial demand has picked up. The bigger realty players are doing well as they have scaled up their volumes to almost four times in a year,” says an analyst form Religare Securities Ltd.

“While the macro drivers are largely non-contentious, we believe that increased foreign participation and new investment vehicles like REITs, would further give momentum to the pace of structural change, according to a report on realty sector from Prabhudas Lilladher.

The commercial space is already in demand but even the residential demand is expected to grow further and the realty sector looks as if it has already geared up for it.

“The major companies have shown good quarterly figures and have been increasing their land banks,” said Ms Shahina Mukadam, Head-Research, IDBI Capital Market Services Ltd. “There is a possibility of interest rate softening a bit, which might boost the residential sector as currently the EMI’s are high,” Ms Mukadam added.

The buying interest is also seen because at this time the valuations seem attractive, according to an analyst.

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