The Hindu Business Line : Ripple effect: Emaar issue drags realty stocks

Mumbai, Feb. 8 Almost all realty stocks came under pressure on Friday following the decision of Emaar MGF to call off its public issue. “The sentiment in the counters is weak with Emaar MGF IPO receiving poor response from investors,” said a fund manger.

The BSE-Realty index dipped 2.46 per cent on Friday with 11 out of the total 14 stocks declining; only 3 advanced. The IPO of Emaar MGF, a joint venture between Dubai-based Emaar Properties and India’s MGF Development, was expected to garner around Rs 6,457 crore at the higher end of the price band. The price band for the issue was at Rs 530-630.

Second revision

The company had re-fixed its price band at the lower end of the price band to Rs 530 from Rs 540. It was the second revision in the IPO’s price band, which was originally fixed at Rs 610-690.

On Friday, while realty major DLF fell by 3.33 per cent, Puravankara was the biggest loser at 5.66 per cent. Unitech (2.76 per cent) and Ansal Infrastructure (2.24 per cent) were the other prominent losers. The fact that the RBI has not cut interest rates has also added to the negative market sentiments.

“The much expected interest rate cut, which was supposed to happen during the end of January, did not happen and this acted as a dampener on the market,” said Shailesh Kanani, analyst, Angel Broking Ltd.

Property sales

According to an analyst, although the realty prices in the Northern region of the country have softened, it has not really boosted property sales and revenues of real estate companies. “As the stock markets continue to be bearish, the realty sector is also getting hit in a big way, because it is highly influenced by the market movements,” said an analyst with a Mumbai based broking firm.

DLF has reported a fall in the value of stocks by around 29.02 per cent over the past month, Unitech by 33.14 per cent, Indiabulls by 16.66 per cent and Puravankara by 26.73 per cent. The supply currently seems to exceed demand in the realty sector, which has led to fall in stock prices,” said Mr Kanani, analyst, Angel Broking. According to analysts, as long as the bearish trends continue to rule the market, things don’t look too positive for this sector.

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