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    Biggest laggard of 2020: This sector beat even the struggling Nifty Bank to become the worst-performing

    Biggest laggard of 2020: This sector beat even the struggling Nifty Bank to become the worst-performing

    Biggest laggard of 2020: This sector beat even the struggling Nifty Bank to become the worst-performing
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    By Pranati Deva   IST (Published)

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    The Nifty Realty index has lost over 28 percent in 2020 while the Nifty Bank is down around 26 percent in this period.

    The banking and financial sector has been on a continuous downtrend in 2020. However, it is still not the biggest laggard this year. The realty index has beaten it to the title.
    The Nifty Realty index has lost over 28 percent in 2020 while the Nifty Bank is down around 26 percent in this period. In comparison, the Nifty is down around 2 percent YTD.
    The COVID-19-led lockdown came as a massive blow to the real estate sector on the back of project delays, the shutdown of restaurants, malls, office spaces decreasing the demand for the sector.
    Around April, NAREDCO President Niranjan Hiranandani estimated a loss of at least Rs 1 lakh crore and project delays of up to 15 months due to the ongoing economic crisis. Meanwhile, private equity investment in the sector also shed 93 percent on a year-on-year basis in the January to May period. In fact, 2020 saw only five PE deals in real estate, dropping to $238 million during this period.
    However, experts believe that there could be some respite for the sector in the September quarter. Data also suggests that the worst seems to be over for the Indian residential sector as sales went up in the September quarter of 2020. Housing sales value in the quarter ended September saw a massive increase of 134 percent over the June quarter, according to a report by ANAROCK Property Consultants.
    Brokerage house Jefferies, in a recent report, mentioned that while lease income from offices is likely to be stable in Q2 (on a QoQ basis), retail and hotel chains will continue to struggle.
    It added that cashflows should improve in the sector as lending and customer payments are normalising.
    Among stocks, it said that DLF is likely to see some sales improvement on pent-up release while Godrej Properties is suffering from a lack of new launches as its inventories run low.
    It added that Oberoi Realty should also see sales jump QoQ due to a very low base and for Prestige Estates, profit and loss (P&L) statement is likely to stay weak on hotel and mall performance issues.
    Sobha’s P&L statement is also likely to lag sales as labour count is still below pre-COVID​ levels, it further stated.
    On a YTD basis, no stock in the Nifty Realty index gave positive returns. Omaxe was the biggest loser, down 58 percent followed by Sunteck Realty, Socha, Phoenix Mills, DLF, Oberoi Realty, Indiabulls Realestate, and Prestige Estates, while lost 20-40 percent each.
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