The Hindu Business Line : Real estate stocks register steep dip

Mumbai, May 6 Real estate stocks, which have been falling out of favour with investors for some time now, registered a steep dip on Tuesday. The BSE-Realty was the biggest loser among the sectoral indices, sliding 4.63 per cent on Tuesday against the BSE Sensex’s fall of 0.67 per cent.

Real estate is a high beta sector, which means that when market goes up, the sectoral stocks rise even higher, and when they fall, they dip even more.

Of the 14 stocks in the BSE-Realty index, 13 stocks declined while only one advanced.

DLF fell 5.26 per cent, Unitech by 7.21 per cent, HDIL by 6.15 per cent and Unitech Ltd was down by 7.21 per cent.

The only stock to register a gain was Mahindra Lifespace, which went up by 1.29 per cent.

The company announced on Tuesday that it had, along with its consortium partner, won a 25-acre residential development project in Nagpur.

“There is a substantial impact of even the smallest of the news if the markets are weak, while in times of bullish markets the stocks are not affected by small news,” said Mr Shailesh Kanani, Realty analyst, Angel Broking.

“The news that DLF had reversed the sale of assets worth Rs 800 crore to its group company has been a dampener for the stock for a while,” said an analyst with a Mumbai-based brokerage firm.

“Some of the broking houses have downgraded DLF, which might have brought in a certain amount of negative sentiment regarding that stock,” said an analyst with a broking firm.

The real estate sector is seeing a possible correction on the back of a possible slowdown in the sector, said analysts.

“There is softening of real estate prices in both commercial and residential sectors, and the correction is expected to happen across India including Mumbai. This is bound to affect growth numbers,” said Ms Shahina Mukadam, Head of Research, IDBI Capital.

Major correction

“There has been major correction in the stock prices of real estate companies in the past three months,” said Ms Mukadam.

The stock of realty major, DLF, has fallen by around 46 per cent from its 52-week high in January. Other stocks to that have registered severe falls from their 52-week highs in January are HDIL which has come down by around 46 per cent, Akruti City (down by 22 per cent), Indiabulls Real Estate (down 34 per cent), and Mahindra Lifespace, (down 37 per cent).

“The uncertainty looming in the real estate markets is leading to profit booking in real estate stocks,” said Mr Kanani.

“There is some shedding of realty stocks from investors’ portfolios as there is a fear of ‘over-owning’ real estate stocks perceiving them to be more risky now because of a possible correction in real estate prices,” said Ms Mukadam.

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