To Sing a Song of a Singh…
The headline on the online edition of the Economic Times is quite indicative of where new money is going to be atleast in the immediate/medium term future. The sector though not officially recognized as an industry (“construction” is an industry as per the planning commission, and not “real estate” while “real estate” is much more than construction) is one sector too impossible to ignore these days has now been conferred its own benchmark index in July. There’s a LOT that seems interesting to me in this sector and hitherto there wasnt any organized source of information on it, from analysis point of view, atleast that a student, a beginner in the area of finance could understand and assimilate.
Well, the fact that BSE Realty closed 7% up today made K P Singh richer than Anil Ambani. This small rally was on account of expectation that RBI too might cut interest rates in line with the Fed. Almost all real estate stocks rallied today. Especially talking about DLF, when its IPO came out by way of book building, the price band was 500-550. priced at premium and many people I know were skeptical about this kind of price. Though the issue was oversubscribed, many Pundits were wary of such a high price. Two things: India Story and Irrational Exuberance. Not only DLF, all the realty stocks have been sold on it. Even so, Real Estate is a sector, where unless there is significant asset pricing anomaly, value of the asset is bound to appreciate over a period of time. So, unless we have way too unjustified prices, like gold, the prices of lands, facilities and real estate parcels shall appreciate over a period of time. Even only with this logic DLF is hold + long term gains is what I feel.
Arguement: real estate growth is real. Considering India Story+Global Factors+ Irrational Exuberance, the fact that there was volatility in this stock for almost a month and but not much happening on volume front means that a lot of people have long term outlook on this stock. (pic courtesy: Yahoo Finance)