The bullish rollover is all across the place now with investors buying out even the minor dips. From Q1 earnings, the trends in banking are particularly comforting. We have also checked the health of real estate and clearly, it is one sector that is far from being out of the woods.
The market climbs back after yesterday's correction but despite the minor hiccups. The investors continue to buy on every dip as earnings from the top Nifty companies boost the confidence in the economy.
The results of the banking sector have certainly helped to calm many nerves. A good chunk of borrowers- who opted for a moratorium- started to pay their installments. Improved collections have brought major relief for the sector.
Considering the positive collection trend during the moratorium 2.0, RBI is now considering to extend the moratorium period even post August. It would be a positive and wise move from the central bank, if implemented.
Moratorium extension could further improve collections, resulting in reduced asset quality stress for the banks. Besides, stressed sectors such as hospitality, automobiles, and aviation could get more time to recover.
Talking about stress, real estate is one area where problems refuse to die. The Covid crisis is abating but rising capital intensity, credit crunch, and increased labor cost continue to plunder the realty market.
Demand continues to remain weak and plunged 73% YoY in June. New launches also fall 94% YoY. Apart from Bengaluru, MMR and Pune, there were no launches in any other market during the month.
Lack of new launches helped to ease inventory pressure marginally. Unsold inventory level dipped 6% YoY. However, due to weak demand on TTM basis, inventory months rose to 36 from 34 months in April 2020.
In terms of inventory, NCR is the worst real estate market with 67 months of stock available; while Hyderabad and Pune remain the best markets with 22 months of inventory. Bengaluru, Chennai and Hyderabad market witnessed a 5-7% price rise YoY, but prices corrected 5% YoY in MMR.