India Real Estate Shares fall|Real Estate Shares fall in bribery case|shares fall sharply

recommend investors stay away from the sector

MUMBAI — Shares of LIC Housing Finance Ltd., along with those of realty companies Hindustan Construction Co., Oberoi Realty Ltd. and DB Realty Ltd. plunged early Thursday after the companies were named in a loan scandal late Wednesday.

The Central Bureau of Investigation Wednesday arrested eight people, alleging they took huge bribes to issue corporate loans. The arrested include four senior bankers at state-controlled lenders, three from a financial services firm and one from India’s largest insurance company.

The CBI alleged that the loans in question were given to companies including Lavasa Corp., a unit of Hindustan Construction, Oberoi Realty and DB Realty, as well as some other listed and privately-owned companies.

In latest trade, LIC Housing Finance, whose chief executive was arrested in the case, was down 6.9% at 995 rupees ($21.7). The BSE Real Estate Index was down 3.4% at 2,938.64, with Hindustan Construction falling 5.8% to 52.40 rupees, Oberoi Realty plunging 6.3% to 247 rupeesand DB Realty sliding 7.8% at 241 rupees. The 30-stock benchmark Sensex, however, was 0.3% higher at 19,517.38.

“In the real estate space, we can see continuous pressure as their funding source line may get impacted. We recommend investors stay away from the sector,” ICICIdirect.com said in a note.

Posted by musicking on Nov 25 2010. Filed under Breaking News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry