Realty index rises nearly 2% on RBI Governor's rate cut comments, snaps five-day losses; here's what analysts say

Real estate stocks rise

The shares of real estate companies rose on November 25, pushing the Nifty Realty index into the green to snap a five-session losing streak. Analysts have noted that the recent correction was a "healthy reset" after valuations went far ahead of fundamentals.

The Nifty Realty index rose nearly 2 percent to 902.15, as seen at 2.20 pm, emerging as the top sectoral gainer on the market today.

Why are real estate stocks rising today?

This comes after Reserve Bank of India (RBI) Governor Sanjay Malhotra said  there is scope to further reduce policy interest rates. "At the last MPC meeting in October, it was communicated clearly there is room to cut policy rates. Since then, the macro-economic data we have received has not indicated that the room to lower rates has decreased. There is certainly room (to lower rates) but whether the MPC takes a call on that in the coming meeting or not, depends on the committee," he said during an interview with Zee Business.

A rate cut by the Indian central bank is believed to reduce home loan EMIs, which in turn spurs demand and boosts real estate stocks.

Top gainers on the realty index today:

Brigade Enterprises shares were the top gainers on the index, rising more than 4 percent. Anant Raj, Phoenix Mills and Prestige Estates shares were up around 3 percent each.

Godrej Properties and Sobha shares rose around 2 percent each, while Oberoi Realty shares were up over 1 percent. DLF and Macrotech Developers (Lodha) shares rose nearly 1 percent each.

Here's what analysts say:

The sectoral index has dropped more than 6 percent over the past five sessions. Analysts however noted that the real estate stocks fell not because the sector had weakened, but because valuations simply ran too far ahead of fundamentals.

The correction seen during the past five sessions was a "healthy reset" and not a structural reversal, said Shiv Garg, Director at Forteasia Realty. "Demand, bookings, and pricing power remain intact, but stock prices needed to cool. Once Q4 numbers confirm cash-flow strength and pre-sales momentum, selective names will reclaim leadership," he added.

Ravi Singh, Chief Research Officer at Master Capital Services, also had noted that the long-term outlook of the sector remains intact. "Supported by urbanisation, infrastructure growth and evolving consumer base, the realty sector continues to be a vital economic pillar," he said.

The recent correction also mirrors concerns around stretched affordability in key micro-markets and a slower pick-up in premium housing, which had driven much of the sector's rerating, said Yash Chauhan, Research Analyst at INVasset PMS, who also noted that this does not indicate a structural reversal as underlying demand indicators such as urban incomes, job additions and rental yields remain supportive.

Shravan Shetty, Managing Director at Primus Partners, expects the stocks to sharply rise if budget and government reforms help increase economic growth and sales pick up. "There still remains a risk with the affordable segment not seeing a pickup and household debt rising," he said.

While near-term volatility persists, structural demand in metros and positive financial discipline among developers indicate a positive outlook into FY26, despite recent corrections and affordability concerns, said Khushi Mistry, Research Analyst at Bonanza. This suggests caution but underlying resilience in the sector, she added.

Follow all LIVE updates from the stock markets here.