The shares of real estate companies dropped on June 10 as investors continued to book profits at elevated levels. The fall in the share prices pushed the Nifty Realty index down nearly 1 percent into the red, extending losses for the second consecutive session.
Notably, the real estate stocks had seen a massive surge recently, after RBI announced a jumbo rate cut which was higher than expectations. RBI Governor Sanjay Malhotra on June 6 announced that the Monetary Policy Committee (MPC) has decided to cut the central bank's policy repo rate by 50 basis points to 5.5 percent. This was higher than the 25-bps rate cut estimated by several analysts.
A steeper rate cut will likely lower interest rates on home loans, which is turn will boost demand and improve the realty players' margins. Additionally, it may also ease borrowing costs for developers, aiding project financing and expansion.
Expectations of a major boost from the rate cut sent the stocks significantly up, with Nifty Realty closing nearly 5 percent higher after the central bank's announcement. However, the euphoria seems to fizzle out now, with investors racing to book profits after record gains.
Sobha and Macrotech Developers (Lodha) shares dropped over 2.5 percent, while Prestige Estates shares fell over 2 percent each. Brigade Enterprises and Anant Raj shares fell over 1.6 percent, while DLF and Raymond shares were trading in the red nearly 1 percent down.
Bucking the trend, Phoenix Mills and Oberoi Realty shares gained over 1 percent. Godrej Properties shares were trading in the green with marginal gains.
"Indian listed real estate developers have delivered an impressive c.25% CAGR in bookings over FY22-25, with bookings growing at c.15% YoY in FY25. While the growth could moderate given the high base, a healthy double digit growth scenario can continue in near term. We feel the residential cycle numbers are here to stay; while there could be a minor moderation, the demand-supply scenario is healthy directionally with high absorption and comfortable inventory levels," JM Financial said in its latest report.
"Additionally, the repo rate cuts, cumulatively ~100bps since Feb’25, should directly enhance affordability and financial viability of projects, particularly in interest rate sensitive categories like mid-income and affordable housing. DLF with its steady annuity cash flows and fully paid-up land banks remains extremely well placed to scale up across segments and newer geographies and is our top pick in the space. At current levels, Sobha, Keystone and Embassy REIT are our other preferred names," it added.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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