Surprise rally in realty stocks
While the benchmark Sensex — which has hit several all-time highs — has risen just 3.6 per cent, in the past month, the BSE realty index rose around 12 per cent. In the last one month, the realty stocks have been rising on the hope of revival of the economy. HDIL rose around 53 per cent to Rs 75.55 in a month. Orbit Corporation, Unitech, Hubtown and Godrej Properties have jumped between 30 per cent and 40 per cent during the period. The market expects a cut in interest rates as inflation is showing downward trend and currency has been stable for quite a while. Another reason could be downfall in valuations in realty market, which has caused investors to become active again.
The BSE realty index is trading at a price-to-earnings multiple of 34.54 times. In 2007, it was at the level of about 86.56 times.
Some analysts advise caution, saying investors should book profits at current levels as the stocks have run up only on the prospect of a Narendra Modi victory.
Source: The Economic Times
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