Realty stocks - trick or treat?

Hey readers, I've been in a flashback sort of a mood for the last couple of days. Looking at the late buying spree witnessed towards the close of yesterday's trading session, my mind went back to the time of last year's Diwali and the two months after that when the market scaled one peak after another. While the rise of the market was stupendous, the fall has been much more sensational. India had the distinction of being the seocnd best market among the emerging economies in 2007; in 2008, it has the distinction of being the third worst performing economy after Russia and South Korea. I guess we just can't shrug off the Russian influence, how hard we may try, can we?

While equities across all sectors have corrected severely, I've been dumbstruck with the correction in the prices of realty stocks. DLF, which touched a high of Rs. 1,250 last year, is now trading just above Rs. 200/-!! Look at Parsvnath Developers - it touched a high of Rs. 598/- in January 2008, yesterday, it closed slightly over Rs. 40/-!! And rest assured, there have not been any stock splits or earth-shattering fundamentally negative news in any of these stocks to make them behave in the manner they have in the recent global meltdown.

I wonder what I would have done if a prophet had whispered in my ears about the upcoming doom of these stocks - I guess I would have probably ignored the call, certifying the poor person as insane! But having the latest carnage, I feel wiser and certainly, much poorer! So much for experience! When investors lose confidence, even the sound fundamentals can't save a vibrant economy like India's! Anyways, the current recovery in the markets should continue given the massive interest rate cuts announced by the RBI today.. I believe a strong gap up opening is on the cards - hope the banks follow these rate cuts with cuts of their own which should reduce the burden on the shoulders of those weighed down by their home loans. I think another rally in the realty stocks is on the cards - now whether it will be sustained or not is entirely your call.

I am off to read Robin Cook's Critical and later catch Horton Hears a Who and Ice Age 2 - purchased the novel and the DVDs of these movies yesterday! Have a great weekend!