Nifty Realty Emerge As Top Sectoral Gainer, Jumps 5.6 Per Cent - Here's Why

Realty sector emerged as the top sectoral gainer on Tuesday, April 15, amid a broad-based rally in the market. The Nifty Realty index, which tracks the top 10 real estate stocks, rallied 5.64 per cent. Leading the index was the Delhi-based developer Anant Raj Ltd, which rallied 8.37 per cent.

Following it, Macrotech Developers rose 8.31 per cent after the Abhishek Lodha-led company and his younger brother Abhinandan Lodha’s House of Abhinandan Lodha (HoABL) amicably resolved all disputes through mediation. The dispute was resolved under their parents’ guidance.

Oberoi Realty gained 5.48 per cent after the National Company Law Appellate Tribunal (NCLAT) rejected Employees' Provident Fund Organisation’s (EPFO) additional claims worth Rs 34.3 crore against the debt-ridden Nirmal Lifestyle Realty Pvt Ltd, a subsidiary of Oberoi Realty.

Shares of Brigade Enterprises rose 4 per cent after rating agency ICRA reaffirmed an AA- rating for the company’s three long-term credit facilities. The rating agency also reaffirmed the A1+ rating for the realty firm’s short-term borrowing facility.

Index heavyweights DLF and Godrej Properties also ended the day higher by 6.24 per cent and 3.78 per cent, respectively. All other real estate stocks such as Prestige Estates, Sobha Realty, Raymond, and Phoenix Mills also ended in the day in green.

So far this year, the Nifty Realty index has yielded a negative return of 19.8 per cent, significantly underperforming benchmark Nifty 50, which declined just 1.75 per cent during the same time. Over the year, the realty index has declined 11.4 per cent, while Nifty 50 gained 4.75 per cent.

The Reserve Bank of India (RBI) Governor Sanjay Malhotra-led Monetary Policy Committee (MPC) on, April 9, reduced the benchmark repo rate by 25 basis points. This rate cut is expected to lead to lower equated monthly installments (EMIs) on home loans, which in turn, is expected to drive property sales higher. Realty stocks are also riding on this optimism.

Karan Aggarwal, Co-founder and CIO, Elever, said, "RBI rate cuts with 6 per cent GDP growth is generally considered a big positive for cyclical sectors like banking, real estate and auto. Combination of rate cuts last week with analysts expecting four rate cuts in next six to eight months and ‘tariff pause rally’ led to a sharp rally in realty stocks.”

Aggarwal, however, advised investors to remain guarded against adventure in realty stocks as the US recession and shrinking US treasury books might create a liquidity crunch in the next few months for real estate and might result in sharp drawdown in sectoral stocks.

According to Pankaj Kumar, Vice-President Fundamental Research, Kotak Securities, "There is positive outlook for residential real estate stocks as several developers continue to guide for double-digit growth, aided by industry growth and market share gains. Further, industry data also suggests healthy traction in launches and sales in Q4 FY25. We expect healthy pre-sales in Q4 FY25 across our coverage universe, owing to seasonality and better launches during the quarter. Q4FY25 has seen some big launches from Godrej Properties, Brigade, Prestige Estates and Sobha."

Kumar also mentioned that most residential real estate stocks are currently valued at 7 to 12 times their estimated adjusted EV/EBITDA for FY26, following the recent dip in the stock market.