Nifty Realty hits fresh 16-yr high; surges 7% in 2 days on healthy outlook

Meanwhile, thus far in the calendar year 2024, the Nifty Realty index has surged 21 per cent, as compared to 2 per cent rise in the benchmark index.

Shares of real estate companies continued their upward movement, with the Nifty Realty index hitting a fresh multi-year high in Tuesday's intra-day trade on the back of healthy outlook.

The Nifty Realty index was up 2 per cent at 959.10 on the National Stock Exchange (NSE). In the past two trading days, the index rallied 7 per cent. It was quoting at its highest level since May 2008. In comparison, the Nifty 50 was down 0.15 per cent at 22,429 at 12:41 pm.

Meanwhile, thus far in the calendar year 2024 (CY24), Nifty Realty index has surged 21 per cent, as compared to 2 per cent rise in the benchmark index.

The demand of the real estate sector is linked to the overall economic prospects of the country. The cyclicality associated with economic outlook, interest rates, and metal prices among others, also render the real estate sector towards cyclicality.

Among individual stocks, Prestige Estates Projects rallied 6 per cent to Rs 1,344.95 in intra-day trade today. In the past two days, the stock has surged 15 per cent after the company entered into a strategic deal with the Abu Dhabi Investment Authority (ADIA) and Kotak AIF for Rs 2,001 crore, for the development of residential projects in prominent locations across 4 cities in India. The stock had hit a record high of Rs 1,440 on January 15, 2024.

Given the increasing demand and consolidation in the sector, this deal will help in accelerating growth and expansion. These funds will fuel the development of greenfield residential projects across the cities of Bengaluru, Mumbai, Goa, and NCR with a combined Gross Development Value (GDV) of over Rs 18,000 crore, contributing significantly to the top line, said the management of Prestige Group. READ MORE

Among the other stocks, Godrej Properties, Oberoi Realty, Phoenix Mills, Sobha and Macrotech Developers (Lodha) are up in the range of 1 per cent to 4 per cent.

With multiple launches planned for Q4FY24/ FY2025E, analysts at Kotak Institutional Equities expect the sales momentum to sustain, going ahead. The brokerage firm said it noted that Q4FY24 has multiple planned launches by key players, which should support full-year sales.

Indiabulls Realestate breached the previous peak levels (in CY22) led by sustained demand momentum. And CY24 is on course to continue the trend provided no major headwinds obstruct construction activities, analysts at Elara Capital had said in a sector update.

The industry is witnessing demand consolidation towards grade A developers, a trend that is projected to persist. The launch pipeline by these developers is expected to strengthen further through new land acquisitions in strategic locations and growth corridors, the brokerage firm said.

Office portfolios may expand further as hybrid working evolves with a strong ‘office-first’ approach. India's growth ecosystem attracts both domestic and foreign occupiers, with global corporations making substantial investments and domestic occupiers expanding. These dynamics are set to bolster office market fundamentals in 2024, analysts said.