The ongoing market turmoil has spared no sector. Companies from all industries have been hit and there are signs of carnage all around us. But amongst them all, the worst hit sector has been real estate. In the past months, the BSE Sensex has lost nearly 34 per cent but the real sector, BSE Realty has witnessed a fall of a whopping 66 per cent. And now with inflation on a roll and interest rates skyrocketing, any chances of improvement in the sector look bleak.
Apparently, mutual funds think of that to be true as well. Funds have significantly cut down their exposure in this volatile sector. In the last six months, mutual funds have offloaded a majority of their holdings in real estate companies. Funds have particularly sold off chunks of small-cap companies like Ansal Properties & Infrastructure and Brigade Enterprises. Funds sold 17.32 lakh shares in Ansal Properties & Infrastructure and 13.94 lakh shares in Brigade Enterprises. 14 funds dumped Brigade Enterprises and four dropped Ansal Properties & Infrastructure from their portfolios. Both these stocks were mauled in the market crash. Ansal Properties & Infrastructure was down a whopping 84 per cent from its high in January, while Brigade Enterprises also lost nearly 72 per cent.
Mid-cap stocks, Peninsula Land and Indiabulls Real Estate were also offloaded in significant numbers. Funds sold 13.53 lakh shares of Peninsula Land and 13.38 lakh shares of Indiabulls Real Estate in the last six months. With nine funds dropping it from their portfolios, Indiabulls Real Estate became less popular. Both these stocks had lost nearly 64 per cent during the period.
The large-cap stocks in the sector didn't fare any better either. Funds reduced exposure in large-cap stock Housing Development and Infrastructure by selling nearly 8 lakh shares of the company by the end of June. Other stocks in which funds pared their holdings included IVR Prime Urban Estate Developers, Mahindra Lifespace Developers, Puravankara Projects, Gremach Infrastructure Equipments & Projects, Omaxe and D S Kulkarni Developers. Mahindra LifeSpace Developers had been dumped by 13 funds during this time. While Housing Development and Infrastructure had lost 64 per cent during this period, other stocks had witnessed a steep fall as well.
Though most real estate stocks seem to have lost popularity among funds, some stocks managed to capture a bit of attention as well. Funds had increased their exposure in real estate major DLF and in small cap companies, Pratibha Industries and Orbit Corporation, in the last six months. Funds had bought 12.43 lakh shares in Pratibha Industries and 7.25 lakh shares in Orbit Corporation. Interestingly, funds bought 19.94 lakh shares in DLF by the end of May 2008 though its price went down by nearly 45 per cent during that time. But in June, funds cut their exposure to the company by selling off 4.18 lakh shares worth nearly 17 crore. Other stocks like Akruti City, Parsvnath Developers, Unitech and Sobha Developers were also bought by funds, though not in very large numbers.