Mumbai: Led by a free-fall in Unitech, realty stocks witnessed massive selling pressure Wednesday, falling by up to 35 per cent on mounting debt worries amid indications that deficient monsoon may prevent future rate cuts by RBI.
Unitech's shares received a severe drubbing, falling 35.27 per cent to end the day at Rs 8.70 on the BSE. Intra-day, it plunged 51.63 per cent to Rs 6.50 -- its 52-week low.
The company's market capitalisation declined by Rs 1,241.27 crore to Rs 2,274.73 crore.
The stock also faced frantic selling amid reports of company defaulting on its loans.
Dismissing these reports, a Unitech spokesperson said: "Rumours are being spread by certain segments of the market to profit from trading pertaining to Unitech defaulting on repayments to certain lenders, which are false and misleading. Unitech has in fact significantly ramped up its execution capabilities and expects to increase deliveries considerably this year."
These deliveries of existing bookings will add to cash flows and profitability and also help in reducing debt. The company's debt has been stable and is at manageable levels and its debt equity ratio is one of the lowest in the industry, the spokesperson added.
Meanwhile, other realty counters like Indiabulls Real Estate plunged 8.08 per cent, Anant Raj fell by 7.12 per cent, Housing Development and Infrastructure Ltd (6.48 per cent), Oberoi Realty (4.47 per cent) and DLF (2.48 per cent).
Following the dip in these stocks, the BSE realty index tumbled 5.54 per cent to settle at 1,419.24.
Shares of Jaiprakash Associates nosedived 20.67 per cent to Rs 13.05, while Jaiprakash Power Ventures slumped 8.06 per cent to Rs 6.50.
"RBI clearly highlighted its dependence on various factors for a further rate cut to come through. These include impact of a weak monsoon on inflation with the IMD downgrading its forecasts further, strengthening of global crude oil prices and the depreciation of the Indian currency and their impact on imported inflation. Thus, the probability of a rate cut in the next policy meet has becoming much slimmer," said Hitesh Agrawal - Head Research, Reliance Securities.
EMIs on home and auto loans are expected to come down with SBI and other banks cutting lending rates after RBI yesterday slashed policy rate by 0.25 per cent.
Reserve Bank Governor Raghuram Rajan, however, cautioned that uncertain monsoon may prevent future rate cuts.
In the stock market the benchmark BSE Sensex ended at 26,837.20, down 351.18 points.
