The shares of several realty stocks were trading in red on June 9 as investors resorted to profit booking at elevated levels. This comes after the stocks saw a massive surge after RBI reduced its policy repo rate by 50 bps, higher than expectations.
Nifty Realty was marginally down in the red to hover around 1,038 in the morning, snapping a two-day gaining streak. The index had earlier surged nearly 4.7 percent to close at 1,039.60 on the last trading session (June 6). This came after RBI Governor Sanjay Malhotra 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.
Notably, 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.
Prestige Estates Projects and Brigade Enterprises shares were down over 1 percent, while Oberoi Realty shares fell over 0.8 percent. Macrotech Developers (Lodha), DLF and Godrej Properties shares were trading in the red with marginal losses.
Anant Raj shares were however up 2 percent, while those of Raymond, Sobha and Phoenix Mills were trading in the green with marginal gains.
"The lower end of the market has seen a decline from 61% share in of sales in CY19 to 33% in CY24 due to elevated home loan rates (rates increased 250bps between May’22 to Feb’23) and negative impact on salaries and job cuts during the COVID period. The repo rate cuts of 25bps in Feb'25, 25bps in Apr'25 and 50bps now in Jun'25 (cumulatively ~100bps) should directly enhance affordability and financial viability of projects, particularly in interest rate sensitive categories like mid-income and affordable housing. According to our calculations, as home loan rates go down by ~100bps from current levels, the tenure for a INR 10mn, 20 year home loan reduces by c.3 years at constant EMI (15% savings) or eligibility increases by c.1.5mn at constant tenure," said JM Financial in its latest report.
Kamal Khetan, Chairman & Managing Director of Sunteck Realty, meanwhile said, "The RBI's bold decision to cut the repo rate by 50 basis points and reduce the CRR comes as a powerful catalyst for the real estate sector. Lower interest rates will benefit homebuyers, especially in mid-income and premium segments where demand momentum is already building. We expect a strong uptick in residential inquiries and conversions as EMIs become more manageable for aspirational buyers. The move is also expected to give a much-needed push to the affordable housing sector, where even a small drop in EMIs can decisively influence buying decisions. Improved credit availability and sentiment will help improve supply-side activity and restore balance in this critically important segment. At the same time, enhanced banking liquidity will ease funding access for developers, enabling faster project execution and timely deliveries."
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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