Nifty Realty up 1.6% as RBI cuts policy rate by 25 bps; Lodha, Godrej Properties rise up to 3%

Nifty Realty rises 1.3% as RBI cuts policy rate by 25 bps

Nifty Realty index climbed 1.62 percent on Friday after the Reserve Bank of India (RBI) cut the key policy rate by 25 basis points (bps) to 6.25 percent, boosting sentiment in the real estate and allied sectors.

The rate cut, announced under new RBI Governor Sanjay Malhotra, marks the first reduction in nearly five years. It follows the last rate hike of 25 bps in February 2023, which had taken the policy rate to 6.5 percent. The decision comes within a week of Finance Minister Nirmala Sitharaman unveiling the Union Budget for 2025-26, which included the big tax break for the middle class to spur consumption amid slowing economic growth.

A lower interest rate environment is expected to support demand in the real estate market and benefit allied sectors such as construction, cement, and steel. Industry experts noted that cheaper borrowing costs could make home loans more affordable and encourage fresh investments in the housing sector.

Reacting to the rate cut, realty stocks surged, with Macrotech Developers (Lodha) rising 3.61 percent to an intraday high of Rs 1,242 on the NSE. Phoenix Mills and Oberoi Realty gained 3 percent and 2.5 percent, respectively. Shares of Godrej Properties, Sobha, and DLF also moved higher, climbing up to 2.16 percent.

NAREDCO President G Hari Babu said the move would provide both a psychological and financial boost to developers and homebuyers, enhancing investment appetite.

Sonam Srivastava, Founder and Fund Manager at Wright Research PMS, noted that lower rates could stimulate credit demand for banking and financial firms while improving net interest margins. "The real estate sector stands to gain as reduced home loan costs could drive housing demand. Consumer durables and auto segments may also see higher sales, especially in the premium category," she said.

The RBI had paused its rate hike cycle in April 2023 after six consecutive increases totalling 250 bps since May 2022. The latest cut is seen as a step towards supporting economic growth and reviving consumer confidence in the housing market.

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