Real estate stocks, which were battered 20-30 per cent last week following raids by the Central Bureau of Investigation (CBI) on banks and housing finance companies in connection with the real estate bribes-for-loans scam, are making a comeback.
Shares that rose sharply included Mumbai-based Orbit Corporation, Indiabulls Real Estate, HDIL, HCC, DB Realty and New Delhi-based DLF, among others. The Bombay Stock Exchange (BSE) realty index was up 5.67 per cent at 2,925. The broader index Sensex of BSE was up 0.6 per cent at 19,521.
Share prices of top developers rose between 4 and 14 per cent in a single trading session today, after Finance Minister Pranab Mukharjee asked investors not to press the panic button over the housing finance racket. He was talking to reporters on the sidelines of a conference in New Delhi.
After the CBI raids and arrests last Thursday, shares of realty companies had crashed 20-50 per cent in just four or five trading sessions. Officials of major banks, LIC Housing Finance and Mumbai-based broker Money Matter Financial Services, were arrested for allegedly accepting kick-backs for sanctioning mega-crore loans to corporates.
| ON THE RISE | ||
| Stocks | Rise in % | Current price (Rs) |
| Orbit Corp | 13.91 | 82.30 |
| HCC | 8.49 | 43.45 |
| Indiabulls Real Estate | 8.43 | 153.65 |
| DLF | 7.00 | 307.25 |
| Anant Raj | 6.75 | 112.30 |
| Sobha Developers | 6.08 | 325.45 |
“As far as the issue (CBI raids and housing loan scam) is concerned, we are examining it but one point I would like to emphasise that there is no need of pressing the panic button. I am in talk with the Reserve Bank of India (RBI) governor and Life Insurance Corporation (LIC) chairman. All the roles, which have been given to the various concerns, they are well protected,” said Mukherjee.
Equity analyst S P Tulsian said: “Stocks crashed only due to a knee-jerk reaction by some large players. Also, there was panic by big traders, who had come margin pressure as markets fell due to uncertainty after CBI raids.”
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According to Tulsian, the valuations of some of the companies, which witnessed a sharp fall, were looking healthy. “A few real estate companies’ stocks seem to be attractive fundamentally now,” he said.
Over the past one week, stocks of DB Realty crashed the most. The company lost 50 per cent of its share value on the bourses and touched a 52-week low at Rs 190 in intra-day today, before hitting a 5 per cent upper circuit. Orbit Corporation fell 35 per cent in a week. Ajit Gulabchand-promoted HCC, which built the Lavasa Lake city, was down 34 per cent.
It was believed in the market that directors of Money Matters Financial were associated with Lavasa Corporation, as they had agents to sell the company’s properties.
Among other stocks, Ansal Property, Marathon Next Realty, HDIL, MVL, Nitesh Estates, Ackruity City, Arihant Foundations, Puravankara Projects and DLF had crashed 15-35 per cent in just over a week.