Nifty Realty top sectoral gainer, stocks rise up to 6% as RBI MPC leaves rates unchanged

Realty stocks jumped up to 6 percent, pushing the Nifty Realty index 1.7 percent on April 5 after the Reserve Bank of India (RBI) held policy rates unchanged at 6.5 percent for the seventh time in a row, in line with market expectations.

RBI’s status quo would sustain the momentum in residential real estate sales, allowing aspiring homebuyers to proceed with the purchase, ANAROCK Group chairman Anuj Puri said.

Mahindra Lifespace Developer jumped 6 percent, Oberoi Realty was up 2.8 percent, Godrej Properties 2.3 percent, Macrotech Developers (Lodha) gained 1.33 percent and DLF was up 1.2 percent.

The Nifty Realty index was the top sectoral gainer as well.

“Consistent home loan rates enhance consumer confidence, underpinning investment decisions and fostering an environment conducive to sustained development,” Dharmendra Raichura, VP & Head of Finance at Ashar Group, said.

The RBI’s decision extends favourable conditions for potential homebuyers, contributing to resilience and vitality in the real estate sector, he said.

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In FY24, Nifty Realty was the top-performing sectoral index, zooming 132 percent as majority of stocks saw a stellar growth following optimism about the growth prospects of these companies, and good sales numbers.

Of the 10 index constituents, six had multibagger returns. Sobha led the pack, rallying 235 percent. Prestige Estates Projects, DLF, Macrotech Developers, Godrej Properties, and Phoenix Mills delivered returns ranging from 100-230 percent.

Outlook

The outlook for the sector remains positive, as developers acquire land for new projects

According to JLL, 2023 was a record-breaking year for the estate across asset classes, reflected in the strong demand and supply performance.

As the sector continues its journey on a steep growth curve, developers are building a robust supply pipeline by investing in land acquisition, it said.

India’s fast expanding middle class is seeing increased disposable income, one of the factors driving up the demand for residential properties.

A shift towards a more affluent lifestyle is also fuelling the desire for luxury homes, offering amenities and comforts beyond those found in conventional housing.Follow our live blog for the latest on RBI policy meet

Morgan Stanley expects the sector’s relative outperformance to be driven by pre-sales momentum.

“As the pre-sales momentum slows, the market is likely to focus on return on equity (RoE), where Macrotech and Oberoi Realty is expected to fare well,” it said.

The housing market is expanding rapidly and maintaining steady home loan rates is essential to keep the market in check and raise consumer confidence in general.

The RBI’s decision offers homeowners a significant benefit and much-needed relief in the face of rising housing costs, said Manju Yagnik, Vice Chairperson of Nahar Group and Senior Vice President of NAREDCO- Maharashtra.

“Buyers are satisfied with a steady repo rate since it gives them another opportunity to purchase real estate at a good price,” Yagnik said.

Also Read | RBI MPC | Rate-sensitive stocks trade mixed after RBI Monetary Policy

The decision to keep rates unchanged sets a base for the housing sector’s long-term stability and expansion and boosts the optimistic attitude currently permeating the market. “With the understanding that the market is in a favourable position to support their investment decisions, purchasers can move confidently through it,” she added.

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