RBI policy impact on realty stocks: Nifty Realty index trims losses as repo-rate kept unchanged

After hiking interest rates by 250 basis points from May 2022, the RBI hit pause in February 2023.

Realty stocks traded with cuts following  the Reserve Bank of India's Monetary Policy Committee decision to keep the repo-rate unchanged at 6.5 percent. After hiking interest rates by 250 basis points from May 2022, the RBI hit a pause in February 2023.

Ahead of the announcement, experts had predicted that the central bank will continue its pause. Real estate players were looking forward to the monetary policy reversal, as the sector is heavily affected by any interest rate movements

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In a positive market, the Nifty Realty index trimmed its intraday losses, to trade around 0.2 percent lower, with Sobha, Macrotech Developers and Brigade Enterprises as the top losers, dragging the index.

Godrej Properties and Prestige Estate Projects traded 1 percent lower as of 10.10 am. Macrotech Developers stock tanked 2 percent, while Sobha slipped 3.5 percent.

A contributor to Sobha’s poor performance could be its dismal quarterly earnings result, as the south-based real estate developer has recorded a consolidated profit of Rs 15.08 crore, down 52.6 percent from last year.

Experts suggest that any hints of a rate cut in near future from Governor Shaktikanta Das could ignite a fresh rally. “Markets will keenly watch the RBI governor's intent to cut rates. Investors can expect renewed rally if the central bank steered towards monetary policy easing, otherwise it may remain as it is,” said Nishit Master, portfolio manager at Axis Securities PMS.

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In December, the key lending rate was kept steady, to which G Hari Babu, National President of National Real Estate Development Council said it will positively impact both residential and commercial segments.

"We remain committed to contributing to the robust growth of the real estate sector, particularly in affordable housing, buoyed by the positive indicators set forth in the RBI's monetary policy announcement. However, despite the pause, the current interest rate is at its highest in the last four years,” he added Council.

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