The reason I say buy property at this point is:
1) This is the only sector that underperformed (apart from cement). When the index typically seems expensive, investors start to run to undervalued sectors, and property fits that bill.
2) Why is it undervalued? Well until now balance sheets of developers was a key reason why stocks were underperforming. Several analysts released reports on how developers will have shortfall of Rs160bn this year and since raising capital is difficult, stocks would not rise. I personally feel this bad news has bottomed out. As property prices have started rising sharply across the country, the demand for properties has started to pick up significantly. With rising demand, developers will have good pre-sales and cash inflows which will automatically strengthen balance sheet (chicken and egg story). Capital raising is not a concern as most large banks and NBFC's have once again started developer loans (HDFC and LICHF in particular). Property is a sector where investors start to enter only when property prices have moved up to an extent, which has happened.
3) If one looks at results of banks and NBFC's, all are showing spectacular growth in home loan sanctions and disbursements. Several leading banks/NBFC's have also introduced plans where if a customer gets a loan sacntioned by 31-July, they will get a teaser rate and can take discbursements after 2-3months. This clearly is a sign that if customers are taking loans, within next three months they will book properties.
4) Therefore I believe the underlying fundamentals will change over next one quarter and since market discounts the future, one must enter now and take advantage of the upcoming rally in the stocks.
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