Realty stocks big­gest losers in mar­ket cor­rec­tion since Au­gust

HT Estates - - FRONT PAGE - Ami Shah & Bidya Sa­pam

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%. Sun­teck 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 Ltd. “It will be a long time un­less in­ter­est in the real es­tate sec­tor re­vives.”

It started whenIn­fras­truc­ture Leas­ing and Fi­nan­cial Ser­vices (IL&FS) de­faulted on its pay­ment obli­ga­tions, fol­lowed by down­grades by credit agen­cies.

Thep­an­i­cled to as­teep 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.

“Sec­ondly, the in­crease in in­ter­est rates also has an im­pact on de­vel­op­ers be­cause their mar­gins are un­der pres­sure.

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