Nifty Realty up 2% in subdued market, Sunteck, DLF gain upto 4%; here's why

Thus far in the month of June 2025, the realty index has outperformed the market by surging 9.4 per cent, as against 0.5 per cent gain in Nifty 50

Real estate shares rising today

 

Shares of real estate companies were trading higher by up to 4 per cent on the National Stock Exchange (NSE) in Tuesday's intraday trade, in an otherwise subdued market, on expectation of an improvement in demand outlook. The optimism around a pick up in real estate demand comes after the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) cut the policy repo rate by 50bps to 5.5 per cent on June 6.

 

The RBI's MPC also announced a reduction in the cash reserve ratio (CRR) by 100 basis points (bps) to 3.0 per cent of net demand and time liabilities (NDTL) in a staggered manner during the course of the year.  The cut in CRR would release primary liquidity of about ₹2.5 trillion to the banking system by December 2025. Besides providing durable liquidity, it will reduce the cost of funding of the banks, thereby helping in monetary policy transmission to the credit market.

 

 

Sunteck Realty, DLF, Macrotech Developers (Lodha), Godrej Properties, Oberoi Realty,  Prestige Estate Projects and Signature Global were up in the range of 1 per cent to 4 per cent on the National Stock Exchange (NSE) in intraday trade. The Nifty Realty index, meanwhile, gained 2 per cent.

 

At 09:51 AM, the Nifty Realty index, the top gainer among sectoral indices, was up 1.2 per cent as compared to a 0.3-per cent decline in the Nifty 50. Since the RBI policy meeting, the realty index has rallied 4.6 per cent.  CATCH STOCK MARKET UPDATES TODAY LIVE

 

Further, thus far in the month of June 2025, the realty index has outperformed the market by surging 9.4 per cent as against 0.5 per cent gain in the benchmark index. In the past two months, the Nifty Realty index has soared 23 per cent as compared to 4.3 per cent rise in the Nifty 50.

 

Elara Capital view on rate sensitive sectors

 

The current cycle mirrors some patterns but stands out for its pre-emptive nature amid strong liquidity. With front-loaded policy easing, robust capital buffers, and improving credit visibility, early signs of a revival are in place — not just in Financials but also in rate sensitive sectors, such as auto and realty. Overall, the stage appears set for a broader recovery, although its strength will hinge on sustained credit transmission and demand momentum.

 

"Historically, the Realty index has been flat during rate cutting cycle, followed by a 31-per cent surge over the next 12 months, although with wide dispersion. In this cycle, the Nifty Realty is up 13 per cent, reflecting strength in the current housing cycle. Lower borrowing costs are supporting discretionary demand. That said, while a broad-based revival remains data-dependent, early signs are encouraging," the brokerage firm said in a strategy report.  ALSO READ | 5 rate sensitive stocks to buy with up to 26% upside

 

Kotak Institutional Equities' view on Real Estate sector

 

Residential real estate closed FY2025 with 1 billion sq. ft. of sales, down 3 per cent year-on-year (Y-o-Y), largely impacted by Hyderabad, which saw a 33 per cent (Y-o-Y) decline.

 

The MMR (Mumbai Metropolitan Region) and Bengaluru were soft on volumes on account of slower launches, while the NCR (National Capital Region) continued its strong showing, with 47 per cent Y-o-Y growth in volume sales. Price trends remained strong across markets, aiding 10 per cent Y-o-Y growth in sales value.

 

"Valuations for most residential real estate stocks stand at 7-10x adjusted EV/ Ebitda (FY2026E) post some recovery in the stock prices. H2FY25 saw an improvement in sales following a weaker H1FY25; developers expect the momentum to continue. They have guided for double-digit pre-sales growth (20 per cent Y-o-Y in FY2026E for our coverage), aided by industry growth and market share gains," Kotak Institutional Equities said in a sector report.

 

The combined launch pipeline at 140 million sq. ft (+30 per cent Y-o-Y) has a potential GDV of ₹1.7 trillion, which should also support the momentum. Net debt for the listed developers has come off significantly over the past few years, aided by healthy cash generation as well as equity raises. Strong balance sheets would allow the companies to invest in new land parcels, aiding future growth.