Realty index takes big hit, sheds 7.38%

No letting up in market bloodbath

Realty7.38% IT4.21% Capital goods3.30% Oil & gas3.29% Bankex3.21% Tech3.12% Power2.99% PSU2.95% Auto2.45% FMCG2.06% CD1.69% Metal0.81% Pharma0.53%  Other sectors fell in the range of 2-4 per cent. Unitech lost 9.30 per cent to Rs 184.80, followed by DLF which lost Rs 38.40 (7.39 per cent) to Rs 481.55. DLF's stock has slipped 10 per cent from its issue price of Rs 525, while Unitech is trading at its 52-week low.  Other realty stocks that bore the brunt were Phoenix Mills (down 8.27 per cent to Rs 276.85), HDIL (down 8.81 per cent to Rs 573.65) and Indiabulls real estate (down 6.06 per cent to Rs 398.40).  Analysts are of the view that spiralling crude prices and high inflation rate will lead to hardening of interest rates by the central bank, which will add to the woes of the already ailing realty scrips.  Moreover, since it is a high beta sector, the fall was expected, said analysts.  There are concerns of slowdown in certain pockets of real estate and supply over-reaching demand, making things tougher for developers.  Fourth-quarter results of these companies were below expectations and hence investors have been dumping these stocks.  Rajiv Anand, head of Investments at IDFC Mutual Fund (formerly Standard Chartered Mutual Fund) said, "The interest rate environment looks hawkish. Prices were at elevated level. Markets are pricing in that incremental volumes will be difficult to sell"  "There was huge selling pressure in real estate stocks mainly because of a fear of lack of demand. While input costs are going up, there will be a pile-up of inventory with builders and developers, if the current trend continues. Liquidity crunch is causing builders to postpone new launches. Further, the cost of under-construction property is rising as commodity prices head north," said Suman Memani, research analyst, Religare Securities.  Companies such as DLF and Unitech, which are sitting on huge land banks, will have to suffer if the demand-supply mismatch continues, said a broker.