Suggest to avoid real estate stocks; pick up cement and housing finance stocks instead: Ajay Bagga

In a chat with ET Now, Ajay Bagga, Market Expert, shares his views on the real estate stocks. Edited Excerpts:

ET Now: Should one look at buying real estate stocks?

Ajay Bagga: It is a very difficult call. A few names that I do like, but I am not taking particular names. Overall whoever has high leverage, please stay away from real estate stocks. They have a lot of catching up to do. There is a lot of supply in the real estate segment. If you residential, you have 84 months of inventory pile ups in certain markets. Commercial is looking up because the builders have constricted the supply coming into commercial. As the economy picks up, commercial should do better. But real estate stocks in India largely have been anti-minority shareholders and very highly leveraged. As a sector, you can do better with banks. If you want a play, look at cement. There are a lot of good companies. They have a lot of operating leverage and 11 per cent volume growth already. Metals being global commodity place, we cannot really look at metals right now in the global environment. But cement will give you good returns that might be better. We also suggest Housing finance companies, so you capture the finance part of it and cement on the other side as suppliers.