Avoid realty stocks despite sharp rise

Investing in indirect beneficiaries of govt policies such as HFCs may be more fruitful

Real estate stocks are seeing increasing investor interest after the Budget announcements on affordable housing. The Nifty Realty index gained the most in the past three months and one month, with returns of 30.21 per cent and 9.18 per cent, respectively. Infrastructure status means that those constructing projects in the segment would be able to raise loans at a cheaper rate, akin to other infra projects. A lower cost of funds could translate into lower cost for houses.

Stock market analysts, however, say that investors should stay away from the sector. "We feel that the industry is headed for a big