Realty stocks slump in weak market

Stocks of real estate firms today fell by up to 5 per cent even as realty major DLF made its debut on the stock exchanges at a premium of around 11 per cent.

The Bombay Stock Exchange benchmark index, Sensex, which had declined over 100 points to an intra-day low of 14,731 ended the day down by 18 points at 14,861.89.

Ansal Properties and Infrastructure, which fell to an intra-day low of Rs 283.50, settled at Rs 295.50, down by 4.74 per cent. Shares of Unitech, the second-biggest realty firm in terms of market value, fell to an intra-day low of Rs 514 and settled at Rs 524.45, down by 5.21 per cent.

Parsvnath also dipped to an intra-day low of Rs 350.50 and ended down 4.35 per cent at Rs 361.90 on the BSE.

Sobha Developers closed down by 4 per cent, GMR Infrastructure ended lower by 1.27 per cent and DS Kulkarni Developer settled 5 per cent in the red. Akruti Nirman and India Bulls Real Estate fell 1.60 per cent and 0.26 per cent, respectively.

Chirag Negandhi of brokerage Enam Securities said that, "since these stocks were doing quite good for few weeks, may be it's a kind of breather effect. I don't think DLF will have much of an effect on the valuations of other real estate stocks".

DLF had raised Rs 9,187.50 crore by selling 175 million shares through Indias biggest ever initial share offering. The shares hit an intra-day high of Rs 714 apiece and a low of Rs 505.60, before closing at Rs 570.05 on BSE.

Total traded volume in the counter on BSE was 34.22 million shares. Shailesh Kanani from Angel Broking says: "the DLF listing premium It was in line with our expectations. The valuation was too stretched and nothing much was left on the table for investors".

DLF's mega IPO had received an overwhelming response from foreign institutional investors, but the retail investors portion barely got subscribed.

Analysts say that there are many issues concerning the real estate sector. One of them is high interest rates, which is acting as a dampener. Steps by the Reserve Bank of India and the government to curb demand in the sector are also having a negative effect, they say.