MUMBAI: The bearish stock market has dealt a major blow to investors in shares of realty companies, causing a major capital loss to them in the past few weeks. The market sentiment towards the sector is likely to worsen with the withdrawal of high-profile Emaar MGF IPO on Friday, fear brokers.
From its high of 13,647 on January 14 ‘08, the BSE Realty index has crashed 28% to close at 9,784 on Friday. The fall has been sharper than that in the Sensex which was down 16% during the period. Some realty stocks have taken so much beating that they are now quoting at a substantial discount to their respective public offer prices.
Analysts say the hype surrounding realty stocks has been on the wane as investors fear that weak stock market will depress sentiments in the realty market and put pressure on the property prices.
“Investors had taken fancy for realty stocks in anticipation that property prices will continue to move upward. The ground realty, however, is that property prices have been softening, which market kept ignoring during the bull run. The realty stocks are expected to lose 18-20% more and so investors are advised to exit investments at every bounce back in the share prices,” said Karvy Stock Broking vice-president Ambareesh Baliga.
While almost all the listed realty stocks have lost ground, some of them have, in fact, crashed below their respective offer prices, raising concerns about their valuations. For instance, shares of Omaxe closed at Rs 269 on Friday, lower than the offer price of Rs 310.
The stock has crashed 48% since January 14, ‘08. Parsvnath Developers and Puravankara Projects are two other new listings which are quoting at a substantial discount to the offer prices. The stocks have fallen 42% and 25% in the past three weeks.
“The market reaction is sentimental. What we are facing now is a global phenomenon. I feel this is a temporary phase. The realty stocks would come back after some time and this will help the real estate market to get mature as well,” DTZ director (investments) Amber Maheshwari, an international property consultant. The ongoing bearish trend in the secondary market has taken its toll on the primary market. A few major IPOs like Wockhardt Hospitals and Emaar MGF Land are withdrawn on account of poor investor response.
From its high of 13,647 on January 14 ‘08, the BSE Realty index has crashed 28% to close at 9,784 on Friday. The fall has been sharper than that in the Sensex which was down 16% during the period. Some realty stocks have taken so much beating that they are now quoting at a substantial discount to their respective public offer prices.
Analysts say the hype surrounding realty stocks has been on the wane as investors fear that weak stock market will depress sentiments in the realty market and put pressure on the property prices.
“Investors had taken fancy for realty stocks in anticipation that property prices will continue to move upward. The ground realty, however, is that property prices have been softening, which market kept ignoring during the bull run. The realty stocks are expected to lose 18-20% more and so investors are advised to exit investments at every bounce back in the share prices,” said Karvy Stock Broking vice-president Ambareesh Baliga.
While almost all the listed realty stocks have lost ground, some of them have, in fact, crashed below their respective offer prices, raising concerns about their valuations. For instance, shares of Omaxe closed at Rs 269 on Friday, lower than the offer price of Rs 310.
The stock has crashed 48% since January 14, ‘08. Parsvnath Developers and Puravankara Projects are two other new listings which are quoting at a substantial discount to the offer prices. The stocks have fallen 42% and 25% in the past three weeks.
“The market reaction is sentimental. What we are facing now is a global phenomenon. I feel this is a temporary phase. The realty stocks would come back after some time and this will help the real estate market to get mature as well,” DTZ director (investments) Amber Maheshwari, an international property consultant. The ongoing bearish trend in the secondary market has taken its toll on the primary market. A few major IPOs like Wockhardt Hospitals and Emaar MGF Land are withdrawn on account of poor investor response.
No comments:
Post a Comment