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Realty stocks take a break

While the Sensex ended the week up, the recently-launched Realty Index ended lower, reports Vyas Mohan.

business Updated: Jul 14, 2007 02:42 IST
Vyas Mohan

The realty sector took a break in its bull march at the Bombay Stock Exchange on Friday. Real estate stocks ended lower on the last day of the week as worries of a higher rate of inflation saw investors selling stocks of real estate companies. Inflation for the week rose to 4.27 per cent from 4.13 per cent recorded in the last week. The newly-launched BSE Realty index ended lower by 1.31 per cent at 7,880.70 points.

Meanwhile, the 30-share index of the Bombay Stock Exchange, the Sensex gained 180.68 points or 1.20 per cent to end the week at an all-time high of 15,272.72 points. The broader 50-share index of the National Stock Exchange gained 1.31 per cent to close at 4504.55 points, a new high.

Analysts are of the view that the inflation data released on Friday triggered a needed correction in realty stocks, which were on an upward march in the recent past.

“A higher rate of inflation would have created fears of a tighter interest rate regime in the minds of investors and thus profit booking was seen in real estate stocks. They have been making gains in the recent past and this is just a normal and much-needed correction,” said Mahesh Bhagwat, head of equities of Mape Admisi Securiites.

The market breadth was negative in the BSE Realty index with nine stocks marking declines against two advances. Phoenix Mill (up 4.23 per cent at Rs 2,039.40) and Indiabulls Real Estate (up 1.10 per cent at Rs 510.80), were the only index members to close in the green. Major losers in the pack were Ansal Properties (down 4.89 per cent at Rs 302.70), Parsvanath Developers (down 3.77 per cent at Rs 378.10) and Anant Raj Industries (down 2.91 per cent at Rs 1,280).

Despite reports of DLF making the biggest land acquisition in the country, when it bought a 100-acre land in west Delhi for Rs 1,750 crore, shares of the realty giant dropped by 1.65 per cent to end the week at Rs 600.30. Prior to this deal, the highest ever land deal in the country was Unitech’s land buy in Noida valued at Rs 1,500 crore.

Taking into account the increasing number of real estate companies entering the bourses, the Bombay Stock Exchange had launched a realty index earlier this week to track the stock prices in the sector. DLF is the heavyweight in the Realty index with its free-float market capitalisation forming 35.47 per cent of the total index market capitalisation. Among the eleven members that form the index, other major real estate companies include Unitech (32.01 per cent weightage), Indiabulls Real Estate (14.61 per cent weightage) and Parsvanath Developers (3.34 per cent weightage).