The weakness in real estate shares comes amid broader concerns about elevated crude oil prices and their potential inflationary impact, which could delay interest-rate cuts by central banks.
The selling in real estate stocks came as global crude oil prices and energy markets turned volatile following the US-Iran conflict, raising concerns about inflation and household spending in oil-importing economies such as India.
During its meeting which concluded on September 3, the Goods and Services Tax (GST) Council reduced the GST rate on apparel priced up to Rs 2,500 to 5%.
The Nifty Metal index declined over 0.7 percent to stand at 9,424, while the Nifty Realty index fell more than 0.5 percent to hover around 912, as seen at 10.20 am.
Godrej Properties announced on June 16 that it will develop a premium residential project on a land parcel spanning across approximately 14 acres in Hoskote, East Bengaluru.
Hopes of a rate cut after Reserve Bank of India's MPC meeting in June may be one of the possible triggers for the uptrend in the sector.
The company announced that 'Godrej Astra' is strategically located in Gurugram's Golf Course Road micro-market and is spread across nearly 2.76 acres of land.
Markets maintain premium valuations, with Nifty trading at 20.3x one-year forward earnings, supported by robust growth, stable macroeconomic conditions, and political stability.
Budget 2024 is expected to significantly enhance the real estate sector with industry status, tax reliefs, and reforms to boost affordable housing and project funding.
The realty sector has thrived in 2024, with strong demand driving cash flows and boosting property developers' balance sheets. Industry players eye the upcoming Budget for further incentives and growth opportunities.
Realty stocks had been soaring high in past few months on the back of strong demand, hopes of interest rate cuts
Sobha, Brigade Enterprises, Oberoi Realty, Godrej Properties and DLF stocks fall up to 1 percent.
The current situation is generally advantageous for developers because consumer enthusiasm is strong and input prices are on the rise, providing a sense of higher value in sales.
Motilal Oswal Analysts expect Sunteck Realty to deliver 25 percent CAGR over FY23-26, fueled by ramp-up in launches from new and existing projects
In the September quarter, Sobha recorded its highest quarterly sales at Rs 1,724 crore, up 26.1 percent from the previous year, while Macrotech reported best-ever quarterly pre-sales of Rs 3,530 crore
Investors expect the realty index to outperform other major indices in the second half of FY24 on the hopes of rate cuts ahead
SP Tulsian of sptulsian.com is positive on PSU banks and real estate stocks. He advises to go long on State Bank of India, Bank of India, Dena Bank, DLF and Indiabulls Real Estate.