Seventy one realty companies across the country, listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE), have seen a drop of 38 per cent in volumes for the average daily shares traded in May 2011, as compared to the same month last year. Last month, 46,626 shares were traded as compared to 75,310 last year for the same period.
DLF, the country’s largest realtor by market capitalisation, saw its average trading volume fall to 5,869 shares in May from 8,853 in May 2010, a drop of 33.7 per cent.
Gautam Shah, vice president and technical analyst at JM Financial, says, “Fundamentally, the realty sector is not doing well and the results have been below average. The realty index is close to the lows of 2009. At present, everyone is shorting opportunity, as real estate is expected to continue its languishing performance for another three to six months.”
| DOWNWARD TREND Average daily shares traded on NSE & BSE (in ‘000) | ||
| Top in m-cap | May-10 | May-11 |
| Unitech | 36642.48 | 23126.64 |
| DLF | 8550.38 | 5868.59 |
| HDIL | 7957.86 | 6499.73 |
| Indiabulls Real Estate | 6270.57 | 3019.00 |
| Nitesh Estates | 4058.02 | 140.62 |
| Ansal Properties | 1762.45 | 410.00 |
| ARSS Infrastructure Proj | 1253.10 | 917.01 |
| Orbit Corporation | 1108.91 | 929.34 |
| Parsvnath Developers | 699.76 | 628.83 |
| Kolte Patil Developers | 579.83 | 57.46 |
| Data compiled by BS Research Bureau | ||
The LIC housing scam and realty companies Unitech and DB Realty getting embroiled in the telecom-2G scandal, followed by slowing of residential sales in Mumbai and Delhi, have dented market sentiment. The realty index at the end of on Monday on the BSE saw a drop of 6.36 points, to 2,137.95.
Unitech, the only realty company to successfully raise money through two qualified institutional placements (QIPs) in 2009, has seen a drop of 37 per cent in average trading volume in May. Its share price has fallen 60 per cent since the QIPs.
A real estate analyst from a domestic brokerage said on condition of anonymity, “In April last year, the average volume traded was 83,220 shares.
At present, it is 43,350 shares, close to half. Everyone is sitting tight but it can't sustain for a longer period because if stocks remain illiquid, then it raises compliance issues, which will lead to selling of these shares. Also, the realty index is down by close to 70 per cent.
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For example, foreign institutional investors (FIIs) entered Unitech at Rs 81 per share during the second round of QIP in June 2009; on Monday, the stock trades at Rs 33, a drop of 60 per cent. Everybody is closely watching and FIIs aren't making money on the investments they had, so if one starts selling, there will be heavy selling from all the FIIs.”
Jagannadham Thunuguntla, head of research at SMC Global Securities, says, “Overall, trading is lacklustre and the realty sector totally out of shape. Nobody wants to touch it. it;s been a consistent downward roll for three-four years.”
A Crisil report released on Monday says, “Real estate, construction, information technology and IT-enabled services, and textile sectors, which raised Rs 30.8 billion, have seen 31 per cent erosion (maximum) in the value of funds mobilised, with most of the stocks trading 30-50 per cent below their offer price.”
At the end of the day, DLF shares closed at Rs 229.30, down Rs 1.60 and Unitech at Rs 33.65, down 20p a share.