Real estate continue to underperform: Loganadan

Ajay Loganadan, Head-Invst Advisory Group at HSBC Private Banking is of the view that real estate space is continue to underperform.

Loganadan told CNBC-TV18, "Infrastructure is one space from a long-term perspective that we believe should continue to do well and that’s the biggest need of our country. If one looks at the order book of infrastructure and if one puts the capital goods and the industrials in that space that’s where, one would continue to see good traction with regards to order book. But they are also interest rate sensitive, so if there is a concern with interest rates moving up during the course of this year then they will continue to be under performers."

He further added, "The kind of price erosion we have seen in significant in the interest rate sensitive be it the financials, real estate, infrastructure, industrials as well. So there are definitely pockets of opportunities there and it is important to look at good companies with good solid business models and is not too highly leveraged. That’s the important thing and that’s where one could hide for next 6-12 months. But regarding real estate there are concerns with some of the real estate companies. I think the cost of borrowing for some of these companies has really shot-up and there are concerns over the near-term. So that’s a sector that would probably continue to underperform. We are going to have days like this when since they have bee beaten down, one do have some kind of recovery like the financials have shown today. But for the next few months interest rate sensitive should continue to remain under pressure."

Disclosure: It is safe to assume that analyst and his clients may have an investment interest in the above stock/sector.