Real estate stocks are once again in the news, though not for the best of reasons. And, it once again appears that fund managers are looking at the very stocks that burnt their fingers last year.
Way back in December 2007, real estate stocks were heavily courted by mutual fund managers. A total of 212 open-ended schemes were invested in real estate stocks and the invested amount was as high as Rs 1,544 crore. And when the high flying stocks crash landed in 2008, this sector was battered. The BSE Realty Index shed a mammoth 82 per cent in 2008 making the Sensex fall of 52 per cent appear rather modest. So it was not surprising to see that by January 2009, the number of schemes invested in real estate stocks came down to just 78 and the invested amount to Rs 74.77 crore. But fund managers are once again sniffing at these stocks. Mutual fund assets invested in real estate stocks is now Rs 121.4 crore (March 2009) and the number of schemes invested in such stocks is 102.
In February, fund managers predominantly chased three stocks — DLF, Indiabulls Real Estate and Unitech. Indiabulls was the most favoured at Rs 18.33 crore. But by March, Unitech was replaced as one of the coveted stocks by Mahindra Lifespace Developers, which was picked up by Birla Sun Life India GenNext and Magnum Contra. Indiabulls remained the most favoured at Rs 36.13 crore.
Magnum Midcap, Magnum Contra, SBI Arbitrage Opportunities, Religare Arbitrage and HDFC Arbitrage Retail entered Indiabulls Real Estate in February. In March, Kotak Equity Arbitrage, Taurus Bonanza, Taurus Discovery and Taurus Taxshield bought the stock.
All these four stocks witnessed a price rise for the one-month period ended on March 31, 2009. Mahindra Lifespace gained by an impressive 43 per cent, followed by Unitech at 30 per cent. DLF and Indiabulls Real Estate rose by a comparatively lower 12 per cent and 11 per cent, respectively.