DLF Prepares To Make It into Nifty

July 7, 2007	(1 votes, average: 5 out of 5)  Loading ...
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Realty has been a major factor driving the growth of Indian stock market. The listed companies in the sector are prices more than their counterparts in other industries such as automobiles, FMCG, pharmaceuticals, and cement.

BIG players in Indian property market such as DLF, Unitech, Parsvnath, and Sobha Developers, among others, account for 4% of the BSE Capitalization. The sector’s share is no more than 1 per cent.

After listing its much hyped IPO, DLF holds position among India’s top five most valuable companies.  Following in the list are ICICI, SBI Bank, L&T.

Now, it is to see whether more real estate stocks will get into Sensex or Nifty.  There are no real estate companies listed on these benchmark indexes for the Indian stock market. Contrary to this, sectors like automobiles and pharmaceuticals have five companies each in the Nifty whereas cement and FMCG are represented by three companies each.

Can it prove a milestone for any company to have a representation in Nifty? If a company gets into Nifty, it becomes mandatory for all index funds to invest in the stock pushing up its demand and its market price. It also makes it essential for brokerages and investment bankers both domestic and international to actively track the stock.  All this together put significant impact on the stock price and prove blissful for retail investors.

There are now strong probabilities for DLF to get into the Nifty and thus establishing a precedent for other stocks in the sector. Real estate stocks are still not considered liquid, an underlying fact which may create hitches for DLF to endeavor.

Once DLF makes it to Nifty, it would open the gates for better disclosure regulations in the industry and can bring greater transparency in the sector.

Real estate in India has seen a lot of ups and downs since DLF filed its first draft prospectus in March in 2006.  During the period, several issues of prominent realty players including Parsvnath, Sobha Developers, Akruti Nirman got listed at an amount which was 80% premium to their offer price.

News Published Under:   Real Estate India |

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