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The realty index zoomed by 23 per cent in this period, while the Sensex jumped by only 5.7 per cent.
In the last three trading sessions, the index has risen by 720 points, whereas the Sensex has gone up by 302 points. Ever since its launch on July 10 this year, the realty index has gone up by nearly 69 per cent till date, while the Sensex's rise was 33 per cent - less than 50 per cent of the rise in property stocks' tracking index.
Analysts tracking the sector attribute various factors such as heavy investment by FIIs, hopes of US rate cuts and expectant rate cuts in the country and a psychological impact of repeal of Ulcra in Maharashtra, resulting in the sudden spurt of the realty index.
"A number of fund houses have raised money to invest in infrastructure, which will eventually flow into realty stocks and FIIs are getting clearances to invest in Indian stocks. We expect that money to flow into real estate stocks,'' said an analyst of a national brokerage firm.
The US Federal Reserve's rate cuts by 25 basis points (bps) on Tuesday and expectations of similar cuts by the Reserve Bank of India (RBI) was another trigger for the sharp rise, say analysts.
If the central bank cuts rates again, the demand for housing in the country would improve and realty companies would gain from that.
Fund houses to buy debentures from realty firms
Mutual funds are looking to invest in debt securities issued by the property developers such as DLF, Unitech and Hiranandani group, in an attempt to ride the real estate boom.
All the major property developers have big fund raising plans via debentures, which offer returns ranging from 12-14 per cent per annum compared with 9-9.5 per cent provided by similar debt securities of top-rated corporate houses. ICICI-Prudential MF has launched a debt-oriented real-estate fund to tap the potential.
"We will park funds in high-return yielding debentures issued by the property developers," said Chaitanya Pande, debt fund manager at ICICI Prudential.
