Quote:
Originally Posted by westside
interesting stats. So put together realty and consumer durables have turned out to be as bad as small cap (atleast during this fall). Small cap, i can understand, but realty?? Which goes to show how over-estimated we were.
DLF for instance after having made a high close to 1229 is trading below 600. more than 53% drop off its high price. Realty and Infra, atleast in India, is so vulnerable to delays and high handed policies, that coming to think of it, is it really a safe investment anymore? Also just betting on their land bank is also been very short sighted (given the fact that we tend to overlook aspects like litigation etc).
On the other hand consumer durables taking a beating doesn't really indicate that the demand is slowing down. Many of the leaders, at least in electronics, like Sony LG and Samsung continue to dominate the Indian market and they are not even listed here. Videocon in a way seems to have gone offtrack with its priorities.
If you have this data, can you tell us which are the sectors which have seen the least drop this year? thanks.
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Realty and Infrastructure are two different businesses. It is important that an investor does not mix them up.
Many real estate companies are also into infrastructure and many infrastructure companies are into real estate.
However, there is one basic difference between the two.
Real Estate companies first start projects and then search for buyers.
Infrastructure companies first get orders and then start their projects.
Most of the bigger infrastructure companies in India have very strong order books and a 6-12 month slowdown will hardly affect them.
This is not the case with real estate companies. A slowdown can even mean that a company have monthly sales of Rs 100 crore may see its sales going down to Rs 50 crore or Rs 25 crore or even lower.
When real estate gets hit, it gets hit really hard.
US housing meltdown is a good example of this.
India will not see such serious meltdown, but
Indian real estate companies may have very difficult time if US goes into a recession and Indian economy starts to slowdown.
A slowdown will mean
less number of
units sold per month
and also the
prices of these units will be
much lower.
That is the reason why real estate stocks are getting hit so hard.
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BSE FMCG Index is down to 2180 from its high of 2570.
Fall of 15%.
BSE Healthcare Index is down to 3679 from its high of 4485.
Fall of 18%.
Both indices are currently just 3 times their 2003 lows.
Sensex is 5 times its 2003 lows.
What goes up more, falls more.
Worst Performing Sectorial Indices
Linear Mode
