In the morning session on Thursday, January 4, most realty stocks experienced substantial gains, leading to a notable surge in the Nifty Realty sectoral index.
The Nifty Realty index witnessed a robust increase of almost 6%, reaching a fresh 52-week high of 832.60. At around 10:40 am, the index was up by 5.55% at 831.75, with all 10 components registering gains. Shares of companies like Sobha, Brigade Enterprises, and Macrotech Developers (Lodha) saw increases ranging from 7% to 19%, positioning them among the top gainers in the index during that period.
Against the backdrop of an overall positive market sentiment and widespread upward movements in various sectoral indices, the Nifty Realty index notably showcased remarkable outperformance compared to its counterparts on the NSE. Over the last year, the realty index has demonstrated a strong uptrend, witnessing an impressive surge of about 94%. Stocks of companies like Prestige Estates Projects and Sobha particularly stood out, with gains of almost 180% and 120%, respectively.
Industry analysts attribute this surge in the Nifty Realty rally to significant profits in real estate companies. These companies have achieved unprecedented residential sales bookings, dispelling concerns about the potential negative impact of rising mortgage rates on demand.
Additionally, the resurgence in property prices, coupled with increased yields, has made investment in residential properties highly appealing. The heightened attractiveness has led to sustained demand within the real estate sector. Analysts anticipate that robust macroeconomic conditions and a favorable industry landscape will contribute to a prolonged upcycle within the sector, spanning multiple years.
Anil Rego, CEO and Fund Manager at Right Horizon, PMS, explained that the surge in the Nifty Realty rally is primarily driven by substantial profits in real estate companies. These enterprises have recorded remarkable residential sales bookings, alleviating concerns about the potential negative effects of increasing mortgage rates on demand. Furthermore, real estate firms are gearing up for significant project launches in the second half of the fiscal year 2023-24 (H2FY24).
