Prateek Agarwal, Head of Equities, Bharati Axa Investment Managers, said the real estate sector would face tough times going forward. “Fundamentally, we believe things are deteriorating. We don’t believe housing is selling the way it used to sell. Commercial property rentals are stagnating and future rentals are probably lower than those at current,” he told CNBC-TV18.

Excerpts from CNBC-TV18’s exclusive interview with Prateek Agarwal:

Q: Give us an idea of the kind of mood that we are stepping into April with? We are looking at earnings, we had advanced tax numbers, which would bolster sentiment but there is inflation and other concerns and the confidence of crisis is still reflected on the F&O side?

A: We should step into April with a degree of confidence. The January-March quarter is the end of the quarter year for India Inc and there is lot of cleaning of books. A lot of selling happens for profit booking purposes etc. So, we would see the last of all that over the next few days. If you look at the way global markets have behaved across countries, fund flows are down to crisis levels, if you look at them in conjunction with the size of the GDPs.

Second, the risk appetite is at historically low levels. The important point to make here is that the indicators have not stayed at these kinds of levels for any sustained period of time. We don’t expect them to be there during this period as well because of the concerted efforts that the Fed is making. As soon as there is a revision to the mean that itself should help sentiment across the globe and India in particular, because maybe the domestically we are one of the worst performing markets in the last quarter. So, that is how we would address the market over the next one quarter.

Q: How would you approach the real estate sector now that it has seen some sort of a bounce back over the last couple of days and stock value is at nearly half from their all-time highs? Would you look at it as an opportunity to buy in or are you still skeptical?

A: This is a sector which on bounces would probably perform better than the market. Fundamentally, we believe things are deteriorating. We don’t believe housing is selling the way it used to sell. Commercial property rentals are stagnating. In fact, future commercial property rentals are probably lower than those at current. So, fundamentals are clearly deteriorating for this sector even if we look at the way interest rates may move. That’s a big driver for this sector.

Maybe interest rates may move down. But buying will not happen because one doesn’t expect the Indian interest rates to move down and sink with global interest rates. This is a sector, which will face some tough times going forward.