Realty shares under pressure, index hits record low

DLF, HDIL, Oberoi Realty, Peninsula Land, Unitech, Indiabulls Real Estate and Anand Raj Ind are down 3-10% on BSE.

Shares of real estate companies are under pressure with most of them trading at their historic lows on concerns that there will be no chance of the interest costs declining in the near future as rupee hit new low against dollar today.

DLF, Housing Development and Infrastructure (HDIL) and Oberoi Realty have hit record low, while, Peninsula Land, Anand Raj Industries and Godrej Properties are trading at 52-week lows on the Bombay Stock Exchange (BSE). Most of these stocks are down in the range of 1-10%.

The BSE Realty index, the largest loser among sectoral indices, was down 3.1% as compared to the 1% fall in benchmark S&P BSE Sensex at 1013 hours.

Realty index is currently trading at lifetime low,  and have been almost halved from its 52-week high of 2,327 touched on January 18, this year. The index had touched a record high of 13,848 in January 2008.

Over the past one month, the Reserve Bank of India (RBI), adopted aggressive measures to curtail the rupee’s slide such as tinkering with the daily borrowing limits by banks, reducing the liquidity adjustment facility (LAF), raising the marginal standing facility (MSF) rate, etc.

The strict guidelines introduced by the RBI have made real estate lending even more expensive and cumbersome.

HDIL was the major loser among real estate pack, which tanked nearly 15% to Rs 26.15, also its record low, in early morning deals on reports that Indiabulls Financial Services has alleged that Rakesh and Sarang Wadhawan, the promoters of real estate Company, have failed to pay interest on their loan.

DLF too, trading at its historic low, slipped 6% to 122 on BSE. The stock has tanked 30% in past eight trading sessions, after the Reuters report suggested that Citigroup downgraded the property developer to "sell" from "neutral" and cut its target price to Rs 150 from Rs 209.

“High leverage and mounting interest costs combined with tough macro, slowing demand, and the possibility of tighter liquidity pose significant downside risks to DLF,” Citigroup said in a note on July 25.