Realty index uptrend - Is it sustainable?
Srujani Panda / 11 Oct 2011
Realty Index has been on up-move since past three trading sessions and has actually outperformed the Sensex significantly. While the BSE realty Index is up by 7.36% Sensex has only appreciated 4.36%. So what has suddenly changed in the sector which was hammered left, right and centre in the past few months?
The fact is, nothing has changed and the situation is still grim for the realty players. The higher debt burdens and falling sales volumes are indicating towards the same. Then why there is a sudden up-move in the Realty index?
We are of the opinion that it is just sort of a relief rally after the sector got a severe hammering. Further majority up-move is contributed by DLF that has the highest weightage of 36.94% in the BSE Realty index and has moved up briskly.
DLF has been in the news as it is planning to sell some of the non core assets to reduce the debt. So suggest the investors not to read too much in the current up move of the realty stocks.
Apart from the expected peaking out of interest rate cycle there are no immediate positives for the realty sector. The quarterly results are also not expected to be extra-ordinary as sales volumes have declined considerably resulting in rising inventory levels.
Some amount of positive news is expected from the Tier II and Tier III where the housing finance companies are witnessing some growth but majority of the cities may witness fall in volumes. Further the realisation has already taken a beating which will impact the sales figures.
Considering all these factors, we do not expect the up move to sustain going ahead.
The fact is, nothing has changed and the situation is still grim for the realty players. The higher debt burdens and falling sales volumes are indicating towards the same. Then why there is a sudden up-move in the Realty index?
We are of the opinion that it is just sort of a relief rally after the sector got a severe hammering. Further majority up-move is contributed by DLF that has the highest weightage of 36.94% in the BSE Realty index and has moved up briskly.
DLF has been in the news as it is planning to sell some of the non core assets to reduce the debt. So suggest the investors not to read too much in the current up move of the realty stocks.
Apart from the expected peaking out of interest rate cycle there are no immediate positives for the realty sector. The quarterly results are also not expected to be extra-ordinary as sales volumes have declined considerably resulting in rising inventory levels.
Some amount of positive news is expected from the Tier II and Tier III where the housing finance companies are witnessing some growth but majority of the cities may witness fall in volumes. Further the realisation has already taken a beating which will impact the sales figures.
Considering all these factors, we do not expect the up move to sustain going ahead.
If you want to stay updated with the share market news today, keep a close watch on the indian stock market today with real time movements like sensex today live and overall stock market today trends. Investors tracking ipo allotment status, ipo news today, or the latest ipo india can also follow daily updates along with bse share price live data. Whether you are learning how to invest in stock market in india, preparing for a market crash today, or searching for the best stocks to buy in india, insights on top gainers today india, top losers today india, trending stocks india and long term stocks india help in making informed investment decisions.