A savage cut down almost 4%, the realty index bore the brunt of the Network18 expose which revealed collusion between the CBI's pubic prosecutor AK Singh and the MD of Unitech, Sanjay Chandra.
The beleaguered real estate company was in for a severe beating along with DB Realty, whose promoter Shahid Balwa is also an accused in the 2G scam and out on bail like Chandra. Both stocks (DB Realty and Unitech) tanked almost 18%.
The news couldn't have come at a worse time for the realty index which had only just begun to see signs of a turnaround prior to today’s sell-off; the realty index was up 10.5 percent YTD.
What experts say
"There was a small hope about 2-3 months back when the risk appetite was increasing and there was a mood that rally may have started, but in the last months' mid cap carnage stocks like HDIL collapsed. Two days back this 2G related news has again pushed the reality theme back," Jagannathan Thunuguntla, equity head, SMC Capitals said.
"This seems to be a knee jerk reaction and I don’t think that we will see further weakness in both the stocks," SP Tulsian of sptulsian.com added.
According to portfolio manager, PN Vijay it is premature to draw conclusions and there is no turnaround in any sentiment on real estate, which has turned positive.
These revelations come back to haunt Unitech which has seen a series of crisis since the global financial meltdown in 2008 burdened by a peak debt of nearly Rs 12,000 crore, pledged shares and cash flow problems.
The Unitech stock in October 2008 touched an all time low of Rs 26.60. The cash strapped company then got a lifeline when it raised around USD 750 million from 2 QIPs in 2009.
Chandra's bail to be revoked?
Execution was coming back on track till the 2G scam hit and Chandra found himself in Delhi’s Tihar Jail for almost nine months before he was released on bail.
Almost a year after he was released, Chandra is now staring at the threat of his bail being revoked and his shareholders and customers brace themselves for uncertain times again.