Realty stocks big­gest losers

Hindustan Times (Chandigarh) - Estates - - FRONT PAGE - Ami Shah & Bidya Sa­pam ami.s@htlive.com n

MUMBAI: Realty stocks have eroded nearly 25%, the most among sec­toral indices, since the cor­rec­tion in the In­dian stock mar­ket started in late Au­gust. The change of stance on in­ter­est rates and tight­en­ing liq­uid­ity for non-bank­ing fi­nance com­pa­nies (NBFCs) hit the sec­tor, which had just started see­ing a re­cov­ery.

While the BSE’s 30-share bench­mark in­dex, the Sen­sex, dropped 10.58% since 28 Au­gust, the BSE Realty In­dex eroded 24.55% of its value.

In fact, all the 10 com­po­nents of the BSE Realty In­dex have lost value since then.

In­di­a­b­ulls Real Es­tate Ltd fell the most, de­clin­ing 41.29%. Sun- teck Realty Ltd, Hous­ing De­vel­op­ment and In­fra­struc­ture Ltd and DLF Ltd fell 32.11%, 29.57% and 32.28%, re­spec­tively.

For the year-to-date, the four stocks eroded 62.48%, 16.80%, 69.08% and 44.30%, re­spec­tively.

“Lend­ing is squeezed due to liq­uid­ity con­cerns. Rates have also shot up,” said Dhanan­jay Sinha, head of re­search at Emkay Global Fi­nan­cial Ser­vices Lim­ited.

The panic led to a steep cor­rec­tion in other NBFCs, even as the prob­lems for these other com­pa­nies was due to a liq­uid­ity crunch. The con­cerns were echoed by oth­ers in the NBFC space, too.

“There is a ques­tion mark on whether there is enough cap­i­tal avail­able from hous­ing fi­nance com­pa­nies be­cause of which there is a neg­a­tive out­look on de­vel­op­ment com­pa­nies,” said Amit Goenka, founder and chief ex­ec­u­tive of­fi­cer, Nisus Fi­nance Ser­vices Co. (Nifco), which has an NBFC arm.

On the project fi­nanc­ing front as well, there will be de­lay in fi­nan­cial clo­sure and re­fi­nanc­ing of projects.

While ear­lier com­mit­ments were be­ing honoured, new projects and new fi­nanc­ing were be­com­ing slightly chal­leng­ing.

“There will be over­all slow­down in terms of growth in the real es­tate mar­ket. We are only left with two quar­ters and these are peak quar­ters for the sec­tor. Some­times 65-70% of the sales hap­pen in these two quar­ters. Liq­uid­ity is­sue among NBFCs is go­ing to sig­nif­i­cantly im­pact growth,” said Goenka.

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