Nifty ends below 5800 on settlement day; realty cracks 5 per cent

The benchmark Nifty shut shop below the 5800 - a psychologically important level - on settlement day for November. Shorts build up, selling by foreign investors and lingering effect of housing finance scam could be reasons behind today's sell-off.

Indices closed at two months low and maintained downtrend for third consecutive day, dragged down by realty, metal, capital goods, oil & gas, power, FMCG and ADAG companies' shares. On other side of trade, heavyweights like Infosys, TCS, Bharti, HDFC, HDFC Bank and Hero Honda managed to limit losses.

Impact of housing loan scam has seen in Thursday's trade as well. The Delhi-based Central Bureau of Investigation (CBI) said on Wednesday it had arrested 8 bank officials including CEO of LIC Housing Finance, LIC Secretary (investments), Central Bank director, GM Bank of India and Delhi DGM of PNB. It is a multi-crore housing finance scam; though there is a danger of markets reaching a tipping point with so many scams, Ashish Dhawan senior managing director of ChrysCapital says, this loan scam alone is not a game changing event. He was, however, quick to add that investors may turn cautious due to market-related scams.

Real estate companies' shares completely slaughtered; the BSE Realty Index crashed 5.4% today and tumbled 11% in three days. Mumbai based realty companies hammered the most. DB Realty plunged 10% today and 40% in last five days. HDIL and Orbit Corp fell 8-9.7%. Ackruti City, Anant Raj Inds, DLF, Indiabulls Real Estate, Peninsula Land and Unitech slipped 4-6%.

Investment advisor SP Tulsian, sptulsian.com believes that the real estate sector would be the most affected with the entire banking bribery scandal. ''The next course of action by all the banks who have lent the money would be to recall the loans that were given, and this would pressurise the sector.'' So taking all this into consideration, he said, real estate stocks would remain subdued and correct further from hereon by about 15-20%.

However, State Bank of India, the country's largest lender, sees no impact of a financial bribery scandal on issuances of loans to the real estate sector, its chairman said.