Sensex tumbles as CBI busts housing loan scam

Amar Ambani, Head of Research (India Private Clients), IIFL said "The late afternoon news about CBI raids on housing finance and real estate companies led to a major fall in stock prices of realty, banking and housing finance companies. An already uncertain stock market, grappling with an Ireland collapse globally and domestic issues of 2G scam, microfinance mess and other scams, pared morning gains and the Nifty fell from a high of 5,977 to close at 5,865. It seems like the year 2010 may be remembered as a scam hit year. The market fall came on strong trading volume and turnover, ahead of the F&O expiry on Thursday.



While India has attracted hot money given the global liquidity boom, FDI has been sitting on the fence, unhappy about red-tapism, slow take-off of infrastructure development, talks of change in regulations with retrospective effect post the 2G scam and ongoing tax issue pertaining to Vodafone case. The new revelation by CBI about a multi-crore housing finance scam will only add to the woes."

Commenting on real estate, Amar Ambani said, "We are negative on real estate and advise against any inclusions in core portfolios from this space. Registrations have been dropping, speculative investment is on the rise and the current price points do not offer value to buyers. The last monetary policy, which announced amendments in housing loan disbursements, provided some hint about the RBI’s cautious stand on realty."

Finally, the BSE Sensex fell 232 points to close at 19,460 and the NSE Nifty lost 69 points to close at 5,866.