Realty index extends gains for 2nd day on rate cut hopes; Sobha, Godrej Properties, others surge up to 6%

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26 Aug, 2025 12:21

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Real estate stocks recorded strong gains on June 3, thus pushing the Nifty Realty index into the green for the second consecutive session. This comes amid buzz over a possible rate cut announcement after the RBI’s MPC meeting on June 6.

Nifty Realty index jumped nearly 2 percent to hover around 989 in the afternoon, bucking the overall downtrend in the stock market with benchmark indices Sensex and Nifty standing in the red.

The Reserve Bank of India (RBI) is likely to announce a third consecutive rate cut on May 6 (Friday) after its Monetary Policy Committee (MPC) concludes its deliberations which are scheduled to begin on June 4.

Barclays India said it expects the RBI to cut benchmark rates by 25 basis points, and maintain the 'accommodative' stance. "Lower-than-expected inflation outcome and outlook, underwhelming high frequency activity data for April, in-line GDP growth print for Q4 FY24-25, modest MSP increases, a cut in edible oil import duty are the some of the key reasons why we believe the RBI MPC could likely deliver a third successive repo rate cut of 25bp on June 6 while retaining the stance as 'accommodative'," the firm said in its latest note. SBI Research meanwhile suggested that RBI may go for a "jumbo rate cut" of 50 basis points to reinvigorate a credit cycle.

Notably, a rate cut effectively reduces home loan EMIs for customers, which in turn boosts housing demand.

Sobha shares were the top gainer on the index, jumping over 6 percent to trade at Rs 1,544 apiece. Brigade Enterprises shares followed, rising over 4 percent each. Prestige Estates and Oberoi Realty meanwhile jumped over 2 percent, while Macrotech Developers (Lodha) and Godrej Properties were up over 1 percent. Anant Raj and Phoenix Mills were trading in the green with marginal gains.

Despite the uptrend in the market, DLF shares were trading in the red with marginal losses. Raymond meanwhile was down nearly 2 percent.

Here's what experts say on rate cut's impact on real estate sector:

Ramani Sastri, Chairman and MD of Sterling Developers said, "Affordable financing remains a key driver of demand in real estate, especially in the affordable and mid-income segments. As we await the upcoming RBI monetary policy announcement, the real estate sector is hopeful for a supportive policy measure with further rate cut as it would be highly encouraging for homebuyers and developers alike. With construction costs on the rise affecting capital flows, lower interest rates would also ease financing pressures for developers. Overall, a further rate cut would strengthen market confidence, infuse much-needed liquidity, and also act as a strong signal of policy support for the real estate sector and the broader economy, thereby encouraging investments.”

Pradeep Aggarwal, Founder and Chairman, Signature Global (India), said, "Given that several scheduled commercial banks have been reducing their lending rates following the previous two RBI MPC outcomes, another rate cut at this juncture would act as a catalyst for increased housing demand across segments. As a result, both first-time homebuyers and investors are likely to be encouraged to enter the real estate market, further strengthening demand across the sector."

Ashok Kapur, Chairman of Krishna Group and Krisumi Corporation, meanwhile noted that the boost to real estate sector will also positively impact allied sectors like cement, steel, and construction equipment, further driving economic momentum. "Moving forward, the year looks promising for overall housing demand, and it will present an opportunity for all stakeholders to collaborate and innovate to meet the rising demand efficiently," he said.

"Rate-sensitive sectors, notably real estate and public sector lenders, experienced gains amidst anticipatory optimism regarding the Reserve Bank of India's (RBI) forthcoming policy decision on 6th June, where a 25-basis point (bps) interest rate reduction is widely expected," said Axis Securities in its latest report.

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.