Saturday, May 9, 2009

Real estate stocks boom

Real estate companies are on a roll on the bourses. In less than two months

since the BSE sensex saw its 2009 bottom on March 9,
price of six realty stocks on the
BSE have more than doubled while price of 26 stocks have gained over 50% during the same period. Compared to this, the BSE sensex has gained about 46%.

On an aggregate basis however, investors in these stocks have made just about Rs 31,000 crore during this period with combined market capitalisation of 54 listed realty stocks at Rs 77,400 crore.

While analysts said a combination of factors have led to this sudden surge in stock prices, market players are advising caution to investors.

At least three reasons have led to the spurt in real estate stocks: the recent spate of debt restructuring by the highly-leveraged real estate companies, some pick up in sales volumes, at least by the sector leaders, and sale of assets or reduction in land banks, sector analysts said.

The third reason for the rally is lately some of the large firms sold part of their assets or backed out of ambitious projects. Meanwhile, Heavy selling after midsession gains, weighed on the local bourses as sensex dropped by 178 points.

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