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    Is the tide turning in favour of insurance, real estate stocks? Chakri Lokapriya answers

    Synopsis

    Chakri Lokapriya says that while DLF's profit margins from their latest project will be high, it cannot be extrapolated to the entire real estate sector. Lokapriya also advised investing in SBI Life and HDFC Life from a positional investment perspective but warned against long-term investments due to tax rate and price point changes. The recent upgrade of price targets on insurance stocks by 5% to 25% by CLSA may signify a turning tide for the insurance sector.

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    “I would not extrapolate DLF with the rest of the sector. The profit margins that they will enjoy on this particular project will be very high. It was a long awaited project also. In the last one year, because of the RBI hiking rates, the home loans have gone up from about 6.7% to about 8.7% in a space of 12 months. They are likely to go by another 25 basis points in the next one month or so,” says Chakri Lokapriya, CIO & MD, TCG AMC

    CLSA has come out with a report on the insurance sector and they pretty much have upgraded their price target on every insurance stock by 5% to 25%. Is the tide now turning for the insurance sector?
    All insurance companies have underperformed and they are all down based on pricing pressures as well as competition and regulation changes which will bring down the volumes for the business and all those things are very real. As a positional investment for a trade, I would buy SBI Life, but longer term, tinkering with tax rates and price points is clearly a negative for the sector. So, SBI Life and HDFC Life too from a positional investment perspective.

    What is your outlook on real estate space? Just a few days ago, we were talking to the DLF management who were concluding some pretty healthy sales in their newest project and it seems like the traction is visible within the entire space. Do you have any favourites here?
    I would not extrapolate DLF with the rest of the sector. The profit margins that they will enjoy on this particular project will be very high. It was a long awaited project also. In the last one year, because of the RBI hiking rates, the home loans have gone up from about 6.7% to about 8.7% in a space of 12 months. They are likely to go by another 25 basis points in the next one month or so.

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    Until we hit the peak, there will be that price point which still caters to the IT professional sector which will do well and the super end luxury segment. That means maybe Sobha will do decently but I would not really say that the tide has clearly turned in favour of real estate as a sector.

    How are you viewing this news of HAL OFS? Is there near term pressure on the stock?
    Hindustan Aeronautics is a good stock despite the run over the last one year. This OFS increases a free float which is a good thing and it is kind of manageable because it is far less than what was anticipated. It removes the overhang on the stock. As that percolates through the system, I would buy the stock but wait until this OFS happens.

    What is your opinion on InterGlobe Aviation?
    I would buy it for short-term investment. Crude prices are on their side. Volume of the business is on their side. Also the airfares have not come down that much. It means the margins should be better in this coming quarter. Also they are expanding into cargo and other short international routes. All this should help in the medium term. I have never really invested in airlines as a sector for the long term. We buy it for a short term and then move on.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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