Real Estate Shares Fall Due to Sluggish Realty Market

Real estate shares face heavy pressure of selling due to the sluggish real estate market. The pressure was all the more accelerated when the BSE real estate index closed at 1,822.14 in last week.

Real estate shares fall by 3% and this sector faced the biggest fall in the share- market. Due to profit booking the real estate shares are sold under heavy pressure. The sentiment of the real estate investors was adversely affected when September experienced the ten month’s highest inflation of 7.8 %.

Among all the other sectors real estate was the worst hit as the sector faced a 3% decline. There was a steep decline of the shares of all real estate majors as well. DLF shares were sold at Rs.208 after facing a 4.8% decline.

The shares of Unitech on the other –side were sold at Rs.25.65 after the real estate developer faced a 4.8 % decline. With a 6.8 % drop Anant Raj Industries remained the worst loser. HDIL stood second with a fall by 5.7%.

As there is no sign of any immediate recovery most of the real estate investors are reducing their real estate shares. The recovery is possible only if the interest rate is lowered. Besides, the economy has to perform well as well, Mr. Deven Choksey, MD of KR Choksey Securities opined.

By acquiring a 22 % of growth in September, the BSE real estate index had beaten Sensex which had only could acquire a mere 7.6% of growth.

The stock investors are returning to technology as well as defensive stocks. They show a negative attitude to the real estate shares.  Besides real estate shares, banking sector as well as other capital goods sectors too are approached with negative sentiment.

There are still some stock experts who are optimistic about the real estate shares. An independent stock market analyst S P Tulsian opined that the real estate shares would rise by 5% from the current position. He, however, warned that there is a possibility for some individual- stocks to fall deeper again.

DB Realty remained an exception as it had an improved position. Real estate shares of DB Realty bounced 5% upward and were sold at Rs.103.65 per share. This was mainly because Rakesh Jhunjhunwala’s Rare Enterprises of had purchased 1.25 million real estate shares from DB Realty.

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