DLF, Raymond: Nifty Realty index zooms 10% this week; more steam left?

Indian stock markets have been on an uptrend this week with the benchmarks -- BSE Sensex, and NSE Nifty50 -- set to close the five-day period with at least 4 per cent gains. What caught investors' fancy this week, however, was a sharp rally in real estate stocks.

 

Nifty Realty Index -- the gauge for stocks of real estate companies -- has surged 10.2 per cent, so far, this week. On Friday, March 21, the index advanced 3.2 per cent in the intraday trade with seven out of 10 constituents of the index trading over 1 per cent higher.

 

 

Among individual stocks, Raymond shares jumped 7.7 per cent, The Phoenix Mills stock gained 2.83 per cent, Godrej Properties shares gained 2.16 per cent, and Prestige Estates was up by 2 per cent, as of 12:15 pm.

 

According to Amabreesh Baliga, an independent market analyst, this week's sharp outperformance in real estate counters could be attributed to a short-term pullback in the sector after a period of underperformance.

 

Notably, the Nifty Realty index has tanked 18.8 per cent so far in calendar year 2025, as against a 1.92 per cent fall in the Nifty50 index. Among individual stocks, Raymond, Godrej Properties, Sobha Realty, Prestige Estates,Oberoi Realty, Brigade Enterprises shares have declined up to 28 per cent year-to-date (Y-T-D).

 

That apart, robust housing sales in calendar year 2024, and a flurry of project announcements by real estate players over the past few weeks has aided the sentiment.  ALSO READ | Dividend, bonus issue: REC, TVS Motor, 6 others to go ex-date next week 

According to a recent report by PropEquity, the total housing sales value of top nine cities, including Delhi-NCR, Mumbai, Navi Mumbai, Pune, Thane, Kolkata, Bengaluru, Chennai and Hyderabad, rose by 12 per cent to ₹6.73 trillion in 2024 as compared to ₹6 trillion in 2023.

 

The Gurugram housing market experienced a robust demand for housing units in 2024, where sales rose by 66 per cent to around ₹1.07 trillion from ₹64,314 crore in 2023. In Delhi NCR, the sales value of residential units increased by 63 per cent to ₹1.53 trillion  in 2024 from ₹94,143 crore in 2023.

 

Further, so far in 2025, SignatureGlobal has acquired two land parcels in Gurugram (8.39 acre and 16.12 acre), DLF has acquired a land parcel in Gurugram (29 acre), and Sobha has acquired a land parcel in Mumbai (2.1 acre) for various projects.

 

Will the rally sustain?

That said, analysts remain skeptical of the sustainability of the rally as they view inventory build up, and an uncertain market environment as key threats.

 

Ravi Singh, SVP - Retail Research at Religare Broking, for instance, believes that the next three to six months may test the ongoing rally in the sector.

 

"Real estate stocks may weaken in months ahead as the broader marker conditions are not favourable for a sustained positive trend. Any negative movement in the benchmark Nifty50 index may lead to a sharper decline in real estate stocks," he said.

 

Investors, he added, may take the opportunity to exit the stocks during this temporary relief rally.

 

Ambareesh Baliga, meanwhile, pointed out the significant inventory buildup, especially in the Mumbai and Mumbai Metropolitan region (MMR), which may impact the sector's performance going forward.

 

"The real estate sector typically sees strong demand until May and June, ahead of a monsoon-led slowdown in construction activity. Therefore, the next two to three months will be crucial in determining how effectively the inventory is absorbed," he said.