This festive season, even as you plan to buy a new house, pick up a few housing stocks too, as CLSA says that the sector is slated to do well in the next 12 months. In an interview to CNBC TV18, Mahesh Nandurkar, India Strategist CLSA said, “We have been bullish on housing as a theme for quite some time now. Property affordability in the market is the next growth driver for housing.” According to him, the housing sector had been under pressure due to demonetisation and GST. “ Prior to last Diwali, we did have a good phase in the sector. But, post that we had demonetisation and then GS and the impact of RERA, which has pulled us back a little bit,” Mahesh Nandurkar told CNBC TV18.
Now, there are green shoots of recovery in the sector, as the government has taken a lot of initiatives and the property affordability, especially in the middle and lower income group has considerably improved, says the expert. “The property affordability, for middle and lower end of the market, which accounts for more than 80-85% of the total housing transactions in the country, will be the driver for economic recovery. Some initial signs of that recovery are visible, as trigger for that is being provided by the government, whether home-loan subsidies are given to borrowers, or tax incentives for developers etc,” Mahesh Nandurkar pointed out, adding, “The numbers posted by developers have been okay for the September quarter, and this trend is likely to continue for the next few quarters.”
Where should the investors put their money, to benefit from this trend? “Housing Finance stocks is the best way to play that story, followed by building material, like cement, construction pipe segment, household consumer durable companies, companies on the lighting side. I think the entire chain will do pretty well over the next 12 months.”
While CLSA is optimistic about housing, Mahesh Nandurkar said that the flattish trend in the market will continue in the broader market. “The Indian markets have had a rough patch over the last couple of months. I think the flattish trend will continue. The reason being, we are clearly seeing that the demand-supply for equity in not that attractive. We have a lot of supply of equities, but we do not have support from FIIs. The change in the foreign sentiment is unlikely to change in the near term,” Mahesh Nandurkar said.