The decline in Nifty Realty Index continued on January 13 also. Today this index fell by 4.5 percent intraday. This took its six-session decline to 12 percent. Last week the index had fallen by 7.83 percent. Realty stocks are under pressure due to lack of big project launches and weak global cues. The strong US jobs report has further strengthened fears that the US Federal Reserve may slow the pace of rate cuts. At 11:50 am, Nifty Realty index was trading at 925.10, down 3.97 per cent after hitting an intraday low of 924.55. The ongoing correction reflects the broader market’s downward trends. Sectoral indices have been under pressure since October.
The main reason behind the decline
1. Poor market conditions
Broader equity markets are going through a correction. This correction in the real estate sector has become even faster in recent weeks. Ruchit Jain, Motilal Oswal Financial Services, said rising US bond yields (currently at 4.76 per cent), have hit interest rate-sensitive sectors like real estate hard. Jain said the combination of high bond yields and sluggish market conditions has made realty stocks particularly vulnerable.
2. Decrease in expectations of interest rate cuts
An unexpectedly strong US jobs report showed 256,000 new jobs were added last month. This has reduced expectations of aggressive rate cuts by the US Federal Reserve. Due to the residential segment being sensitive to interest rates, it has a direct impact. Demand from home buyers weakens due to low expectations of interest rate cuts.
3. Launch delays and regulatory challenges
Delays in projects under the Real Estate Regulatory Authority (RERA) have also affected the sector. HDFC Securities analysts focused on the fact that these delays have slowed down launches in the third quarter. However, he expects a surge in new launches in Q4FY25 as pending approvals may come through.
Religare BrokingAjit Mishra It attributed the poor performance of the sector to the non-launch of large-scale projects by leading developers like DLF and Godrej Properties. Mishra said lack of launches from big players has been a key reason for the index’s continued decline.
technical view
Nifty Realty Index has broken its important support levels and may continue to fall. Ruchit Jain says that the next important support zone for this is between 870 and 860.
Vikas Jain, Research Head, Reliance Securities That said, the index’s double-top formation in the 1,130-1,140 range, as well as the breakdown below the 100-day moving average at 1040, has accelerated the selloff. Vikas Jain further said that a bounce is possible from 850-880 range, which coincides with 23 per cent improvement from the recent top of 1135 and strong 21-month moving average. Traders may expect a short-term recovery due to oversold positions, but any bounce is likely to be limited.
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Broad market uncertainty related to various global events, including US trade policy, has also impacted sentiment. Analysts further said that the proposed increase in US tariffs could increase inflation. This may delay the cut in interest rates. Due to this, US assets may become more attractive for global investors. In view of this possibility, the dollar has strengthened. This has increased profit booking by FIIs in Indian markets.
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