»Fast Profits Daily by Equitymaster

On This Day - 22 JUNE 2022
Time to Invest in Real Estate Stocks

Brijesh Bhatia, Research analyst

Real estate stocks are looking good on the charts.

In volatile markets, these stocks are usually shunned but I think it's a good opportunity to buy them.

With the help of four charts I'll show you why I think investors should buy these stocks now.

Watch the video and let me know your thoughts.

Hello viewers. Welcome the Fast Profits Daily. Myself Brijesh Bhatia.

Markets have corrected right from 18,100 back towards nearly 52-week lows of 15,183 levels and in this market as an investor, I think it is an excellent opportunity for a long-term investor to look for the sectors which are outperforming or the stocks which are outperforming, or the stocks which you think the fundamentals are very, very strong, the stocks which are in the current market scenario trending at 52-week high or near a 52-week high.

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But one sector, I think after consolidation of 10 years, the breakout has happened, the re-test has happened. It's an excellent opportunity in this sector, one should look for as an investment per se.

Let's look at the first chart and as you have seen the headline, realty sector is the one I believe offers an excellent opportunity for investors looking for 3 to 5 years' time frame.

 

Let's look at the first chart over here. This is the monthly chart of the Realty Index and I have done a video on the same a few months back as well when the sector was breaking out of its 10 years consolidation.

We saw in July 2021, when this breakout happened at around 360-370 levels, it went to the highs of 560 where markets were also trending very, very bullish.

As the market has seen a downtick, this sector has also seen a correction right from 560 back towards 370-375 levels now, and being a volatile sector generally, it tends to move when the markets are very, very volatile.

But if you look at the monthly chart over here, the breakout happened right at 360. Prices are coming back toward 360 right around the consolidation zone breakout, which was again the previous highs.

 

If I look at the top-down approach over here and move on to the weekly chart, again, the same breakout which happened at 360, being re-tested at around 360 levels again nearly after a year. And if you look at the consolidation when the markets have seen a huge correction right from around 16,800 to 15,200, this sector has shown some steadiness as it fell from around 400 back towards 360. But if you look at the momentum, it is holding quite very, very strong at the crucial re-test level.

Look at the orange line over here, the 100 simple moving average, 100 weekly moving average, has been placed right around the re-test of the breakout levels now. So momentum here indicates that the structure seems to be a very, very bullish over here.

 

If I just add the Fibonacci level over here, if you look at the third chart where I've added the Fibonacci level right from the 160 low to the high of 560, the 50% retracement comes to around 360 which coincides with the breakout re-test level.

If you look at the previous highs, which was somewhere around 320 or 315, it coincides with 61.8% Fibonacci retracement.

So 315-320 on the lower side to 360-370 bands, stands out to be a very, very excellent opportunity for investors to look into this sector.

if I just look at the one chart, which is convincing me that the realty could outperform in the next couple of years, or probably 2-5 years is this ratio chart.

 

So if you look at this chart over here, this is realty index divided by Nifty 500 or CNX 500. The reason to take Nifty 500 is because if you look and a Nifty 50 the realty component is very, very lower. And if I look at the Nifty 500, it covers the broader space of largecaps, midcaps, and a few small caps as well. the Nifty 500 covers the more market breath. The reason to take realty divided by Nifty 5oo was to cover all of the market.

Look over the structure, it broke out of the triangle formation last year. It went higher. When prices tested 560, it was outperforming by a huge margin against the CNX 500 and coming back to re-test that break out.

If you look at the lower line over here which I have extended the triangle, the lower line of the triangle, there is a support placed right at around the crucial re-test level. So the confluence of supports over here on the ratio charts indicates that the tide may turn higher, which means that realty index could outperform against the Nifty 500 or CNX 500 in the coming few weeks or few months, and one should definitely look at the realty space as an investment sector for next 2 to 5 years.

Signing off, Brijesh Bhatia.

Warm regards,

Brijesh Bhatia
Brijesh Bhatia
Research Analyst, Fast Profit Report
Equitymaster Agora Research Private Limited (Research Analyst)

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