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Saturday, December 4, 2010

Chart Patterns of 10 Realty Sector stocks

Readers of this blog may be aware that the realty sector is not my favourite for a number of reasons. The single most important one is the lack of transparency in their financial statements. At the risk of generalising, annual reports of most realty sector stocks tend to hide more than they reveal.

Once again, realty sector companies are under scrutiny for all the wrong reasons. Their insatiable appetite for capital were being satisfied by obtaining loans using agents with questionable methods. Some of the money may have been diverted to the stock market. Environmental and government clearances were fudged to speed up projects or indulge in illegal constructions.

However, it would not be fair to paint all the companies in the realty sector with the same black brush. Here are the chart patterns of 10 realty sector stocks, some of which have done quite well despite the adverse publicity. Some are muddling along trying to keep their noses above water. The less said about the rest, the better.

I don’t really trust the fundamentals of these companies to recommend buying or selling. It is an effort to demonstrate that even in one of the worst sectors for investing, there are always a few stocks that stand out from the crowd.

Ackruti City

Ackruti

The stock has been in a year long bear market – failing to stay above its falling 200 day EMA for any length of time. It had started to fall rapidly even before the news about the circular trading hit the market.

Ashiana Housing

Ashiana Housing

The contrast with the Ackruti City stock is startling. The stock has been in a strong bull market for the past 12 months, dropping briefly below the 200 day EMA during the recent correction. On the upward bounce, the stock is facing resistance from the entangled 20 day and 100 day EMAs. It may correct some more.

DLF Ltd

DLF 

The stock of the biggest player in the sector hasn’t performed at all. The recent correction took it well below its 200 day EMA. The subsequent upward bounce halted at the falling 20 day EMA which is below the long-term moving average. Sign of a bear market.

DS Kulkarni

DSKulkarni

The stock drifted sideways for almost 8 months before rising to a new high in Aug ‘10 on good volumes. It has been in a down trend since then, and is facing resistance from the falling 20 day EMA. The 50 day EMA has slipped below the 200 day EMA and the 100 day EMA is likely to follow – confirming a bear market.

Ganesh Housing

Ganesh Housing

Like the Ashiana Housing stock, Ganesh Housing has been one of the better performers in the sector. The recent correction took the stock below the 200 day EMA. The upward bounce faced resistance from the falling 50 day EMA. The stock has dropped below the entangled 20 day and 100 day EMAs. The correction may continue.

HCC

HCC

The controversy surrounding the Lavasa project could not have come at a worse time for the company. The high volume fall deep into bear country seems to have extinguished all bullish hopes.

Omaxe

Omaxe

After moving sideways just below the 200 day EMA till Jun ‘10, the stock had a sharp rally to touch a new high last month. The recent correction received support from the rising 100 day EMA, and the stock is poised above the 20 day and 50 day EMAs. Technically, the stock is in a bull market.

Purvankara

Purvankara

The chart pattern is similar to that of DS Kulkarni. It moved sideways till Aug ‘10. In Sep ‘10, the stock touched a new high and started a down trend immediately. The recent upward bounce found resistance from the falling 20 day EMA. The stock remains below the 200 day EMA, in a bear market.

Unitech

Unitech 

Another large realty sector stock with more hype than performance. The recent correction dropped the stock deep below its 200 day EMA. The upward bounce hasn’t provided much respite and the stock is back in a bear market.

Vijay Shanti Builders

Vijay Shanti Builders

This stock is a favourite of many small investors because it is ‘cheap’. But cheap can get cheaper. Vijay Shanti has been making lower tops and lower bottoms throughout the past year, and is in a bear market.

Bottomline? All 10 realty sector stocks are under bear attacks. But Ashiana, Ganesh and Omaxe have fared better than the others. If you have holdings in any of the other stocks, this may be a good time to switch. Small investors may be better off by avoiding this sector.

4 comments:

Titu said...

Hello Sir,

I would like to know about your view on Godrej Properties and Mahindra Lifespace in this sector, I like them, but didn't brought them yet, can I consider them for buying them if they currect decently from this level?

Please guide...

-titu

Subhankar said...

Hi Titu

Godrej Properties has insufficient data. The stock is in a down trend since Aug '10 and is consolidating between its 100 day and 200 day EMAs. It can drop to 540 if it breaches the 200 day EMA.

Mahindra Lifespaces is also in a down trend with lower targets of 340 and 300. Can't comment further as I don't track either stock.

SumanSpeaks said...

Vijay Shanthi Builders Ltd is a great scrip to accumulate. I have recommended the scrip around Rs.16.5 last month and it is now racing ahead like a rocket. The next target seems to be Rs.24-25. The company is one of the best scrips in the real estate space with an expected EPS of Rs.5-6 in FY12.

Also, it has huge land holdings in and around Chennai (Madras). Due to the Company’s superb performance it has been ranked among the TOP 400 SMALL CAP CORPORATES OF INDIA in Dalal Street Journal's widely circulated and read "SMALLCAP 400, 2011".

I accidentally came across you blog (website), which is quite informative. Kudos for the same.

Also, if possible, please visit my blog/s in your spare time:

(i) www.sumanspeaks.blogspot.com
(ii) www.sumanspeaksplus.blogspot.com and so on........


Thanks!!

Subhankar said...

Thanks for your comments and kind words.