With average returns of 18 per cent over the past year, listed real estate investment trusts (Reits) have clearly outperformed both the Nifty Realty index and the Sensex. Over the same period, Nifty Realty fell 15.5 per cent, while the benchmark index was largely unchanged. Steady office leasing, the Securities and Exchange Board of India's (Sebi's) decision to reclassify Reits as equity instruments, and ongoing portfolio expansion have strengthened the sector's appeal.
After giving negative or low returns from 2013-2016, the Nifty Realty Index is up a whopping 91.14 per cent, making it the best performer year-to-date. Can you still make money in this sector? Sanjay Kumar Singh finds out.
The equity market's recent downturn appears unlikely to slow the brisk pace of mutual fund (MF) scheme launches, at least in the coming weeks. Last month, fund houses introduced 21 new equity schemes, with another five launches already lined up for November. The number of filing with markets regulator, Securities and Exchange Board of India (Sebi), suggests this momentum will continue with asset management companies (AMCs) seeking approval for 21 more equity schemes in October.
The Budget proposals are expected to boost the fortunes of consumer goods and fast-moving consumer goods companies, which have been struggling with poor consumer demand for more than a year. The Budget announcements, such as the increase in standard deduction by Rs 25,000 for income-tax payers and slab revisions, will put more money in their hands, boosting consumer demand. Private consumption is also likely to benefit from a new scheme to offer internships to 10 million youths in the country's top 500 companies.
Shares of real estate firms have been outperforming over the past year. The rally, analysts say, may hit roadblocks in the near term amid stretched valuations, even as the long-term prospects for the sector remain ebullient. "Most of the positive news flow is already in the price. Hence, investors sitting on hefty profits may partially cash out at current levels," suggests V K Vijayakumar, chief investment strategist at Geojit Financial Services.
CLSA has downgraded select real estate stocks and expects most counters from this sector to consolidate in the months ahead after the sharp run seen in them in the last few months. Most positive factors in terms of a pick-up in housing demand and office space absorption, it said, are already priced in. "We expect housing industry demand to grow around 12 per cent in 2024 and for large developers to outpace industry to grow at 15 - 20 per cent.
HDFC was the top loser in the Sensex pack, shedding over 1 per cent, followed by Nestle India, ICICI Bank, Kotak Bank and HDFC Bank. The NSE Nifty declined 15.35 points to 17,546.65.
After Maharashtra, analysts expect more states like Karnataka and Haryana to slash stamp duty rates. However, analysts, do caution that it's still a long road to recovery for the realty sector.
Analysts, however, suggest investors remain selective on realty stocks and buy only where there is revenue visibility and a credible promoter backing.
A recent report by Citi had pegged the total amount stuck in stalled projects across seven major Indian cities (Bengaluru, Mumbai Metropolitan region, National Capital Region, Ahmedabad, Hyderabad, Kolkata and Pune) at Rs 80,000 crore.
The market breadth, indicating the overall health of the market, turned negative from positive
The BSE Midcap also cut all its intraday gains to shed 0.3% at close
NTPC, Sun Pharma Coal India and Asian Paints were among top losers on BSE Sensex
Puneet Wadhwa and Debashish Pachal locate real estate stocks to watch out for.
The S&P BSE Midcap and the S&P BSE Smallcap indices added 0.5% and 0.7%, respectively
The BSE Midcap and the S&P BSE Smallcap indices outperformed to gain 0.6% and 1.1%, respectively
ITC, Sun Pharma, Cipla and Tata Steel were top gainers on BSE Sensex
The market breadth, indicating the overall health of the market turned negative from positive
Tata Motors (down 1.7%) was the top loser on Sensex and Nifty, while Lupin (1.6%) gained the most.
The BSE Midcap and the BSE Smallcap indices pared all intraday gains to end 0.3% and 0.5% lower
The S&P BSE Midcap and S&P BSE Smallcap indices hit a new lifetime high
Though the developments are positive, analysts say the benefits will accrue only in the long run
Market breadth depicted gains with 1,476 advances over 1,403 declines on the BSE. 140 stocks remained unchanged.
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