At the centre of the crash in the nine-day rally at the Bombay Stock Exchange was a sharp correction in the real estate index that fell by 4.4 per cent on Thursday.
Realty major DLF saw its share price fall by up to 11.7 per cent during the day after the Punjab & Haryana High Court, on Wednesday, cancelled the allotment of 350 acre of prime land to the firm in Gurgaon.
While the realty index was the biggest loser, stocks in the metal and capital goods sectors, too, witnessed corrections. The two sectoral indices fell by 1.5 per cent and 1 per cent, respectively, taking the Sensex down by 0.2 per cent to 27,085.9.
DLF was the biggest loser among the realty stocks on Thursday and closed at Rs 167.3 with a fall of 8.6 per cent, while Unitech and Oberoi Realty, too, declined by 6.3 per cent and 5.3 per cent, respectively.
In a matter of a week, DLF has faced two court rulings that have impacted its shares negatively. While the Supreme Court directive last week may have a bearing of up to Rs 630 crore (final verdict still awaited) on the company, the latest high court order may impact the firm’s land holdings in Gurgaon.
“The company is awaiting a copy of the order and can offer detailed comments only pursuant to that. However, at this juncture the company would only like to clarify that the said land was awarded to DLF by two rounds of international competitive bidding processes,” said DLF in a filing to the BSE.
Shares of DLF have been under pressure over the last couple of months and, in the last one week, the shares have fallen by 12.6 per cent even as the Sensex witnessed a rally extending for nine sessions in succession, breaching the 27,000-mark for the first time on Tuesday.
Over the last two months the firm’s stock has fallen by 25 per cent, losing close to
Rs 10,000 crore or a quarter of its market capitalisation.
Financial services firm, Edelweiss, in a report on Thursday maintained a buy on the stock even as it felt that the court order is a negative for the company. “We estimate development potential of the 350 acre land parcel to be 10 msf,” said the report.
“Cancellation of allotment of the land parcel is a negative for the stock, both in terms of valuations as