Resilient realty: Green clouds and signs of opportunity
Brigade Enterprises Ltd, and Phoenix Mills Ltd have performed exceptionally well, even through the pandemic. Will real estate stocks still outperform as the broader market continues to rise? To answer this, let us analyse the Nifty Realty/Nifty 500 ratio chart. Given that most constituents of the Nifty Realty index are mid-cap and small-cap stocks, the Nifty 500 is an appropriate benchmark.
The monthly ratio chart shows breakouts similar to those of the Nifty Realty index. Based on historical patterns, a decade-range breakout typically signals a multi-year rally with a multiplier effect. A retest of this breakout presents a potential opportunity to accumulate stocks.
The Average Directional Index (ADX), which identifies trends, continues to indicate a bullish scenario, suggesting that the Nifty Realty index will likely outperform broader market indices. Using the Multi-Denominator Matrix scanner—which compares each constituent of the Nifty Realty index against both the Nifty 500 and the Nifty Realty index using a 1% and 3% point-and-figure charting method on the weekly chart—we can identify potential outperformed. The 1% will highlight the medium-term trend, while the 3% will be helpful for long-term investors.
The table generated from this analysis highlights stocks with scores ranging from +10 to -8 based on their performance (data as of the end of trade on 2 August 2024). The higher the number, the better the chance the stock will perform well. If we base it purely on this, then Godrej Properties Ltd, Suntec Realty Ltd, Brigade, Phoenix, and Prestige lead the table.
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