Nifty Realty falls nearly 6%, extends decline to nearly 15% in 6 sessions: Weak global cues among key factors weighing on sector

1. Unfavourable Market Conditions: The broader equity markets have been in a corrective phase, which has intensified for the real estate sector in recent weeks. Ruchit Jain, VP and Head of Equity Technical Research at Motilal Oswal Financial Services, pointed out that rising US bond yields, currently at 4.76 percent, have weighed heavily on rate-sensitive sectors like real estate. "The combination of higher bond yields and subdued market conditions has made realty stocks particularly vulnerable," Jain noted.

2. Diminished Rate-Cut Expectations: An unexpectedly strong US jobs report, which showed 256,000 jobs added in the previous month, has reduced hopes of aggressive rate cuts by the US Federal Reserve.  The housing segment, being sensitive to interest rates, is directly impacted as reduced rate-cut expectations weaken demand from homebuyers.

"The recent U.S. labor market data showed an addition of 256,000 jobs in the previous month, reflecting strong economic momentum. This further reduces expectations of an interest rate cut, strengthens the dollar, and exacerbates FII outflows. The resulting weakness of the Indian rupee against the dollar has contributed to a decline in Indian markets," said Yashovardhan Khemka, Senior Manager - Research & Analytics at Abans Holdings.

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3. Launch Delays and Regulatory Challenges: Delays in project approvals under the Real Estate Regulatory Authority (RERA) have also impacted the sector. Analysts at HDFC Securities highlighted that these delays held back launches in the third fiscal quarter. However, they expect a surge in new launches in Q4FY25 as pending approvals could come through.

Ajit Mishra, SVP of Research at Religare Broking Ltd, attributed the sector’s poor performance to the absence of big-ticket project launches from leading developers like DLF and Godrej Properties. "The lack of momentum from heavyweight players has been a significant factor in the index’s continued slide," Mishra said.

Key Technical Levels to Watch  

The Nifty Realty index has breached key support levels and may continue its decline. According to Ruchit Jain, the next major support zone lies between 870 and 860.

Vikas Jain, Head of Research at Reliance Securities, noted that the index’s double-top formation in the 1,130-1,140 range, coupled with a breakdown below its 100-day moving average at 1040, has accelerated the sell-off.

“A bounce is possible from the 850-880 range, which aligns with a 23 percent correction from the recent top of 1135 and a strong 21-month average,” Vikas Jain said. He added that traders could expect a short-term recovery due to oversold conditions, but any bounce is likely to be limited.

Broader market uncertainty linked to global events, including U.S. trade policies, has also impacted sentiment. Analysts noted that inflationary pressures from proposed U.S. tariffs could delay interest rate cuts, making American assets more attractive to global investors. The resulting dollar strength has led to FII profit-booking in Indian markets.

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