Nifty Realty tanks 4%: Index slips into bear market as sector faces turbulence

The Nifty Realty index slumped nearly 4 per cent in Tuesday's trading session, marking a steep 26 per cent decline from its all-time high of 1,157.35 recorded on June 18, 2024. This sharp correction has officially pushed the sector into a bear market.

The sell-off was broad-based, with all 10 index constituents trading in the red. Stocks such as Oberoi Realty, Sobha, Phoenix Mills, Godrej Properties, Mahindra Lifespaces, Brigade Enterprises, DLF, and Prestige Estates recorded losses ranging between 3 to 6 per cent during the session.

Top losers in Nifty Realty

• Oberoi Realty: -5.83%
• Sobha: -5.26%
• Godrej Properties: -4.94%
• Phoenix Mills: -4.09%
• Mahindra Lifespaces: -4.04%
• Prestige Estates: -3.69%
• Brigade Enterprises: -3.11%
• DLF: -3.13%
• Raymond Ltd: -3.05%
• Macrotech Developers: -2.07%

Why is the real estate sector under pressure?

The steep correction in the Nifty Realty index is part of a broader risk-off sentiment gripping the Indian stock market. The sector had been a key beneficiary of the post-pandemic real estate boom, particularly in the luxury housing segment, which witnessed exponential growth. The Nifty Realty index reached an all-time high in mid-2024, riding on strong demand and premium pricing.

However, post-election uncertainties triggered a shift in sentiment. Delays in project approvals, rising interest rates, and liquidity concerns have all contributed to the ongoing sell-off in realty stocks. Additionally, developers are facing challenges in launching new projects due to regulatory roadblocks, which has further dampened investor confidence.

Sector outlook: More pain ahead?

Despite strong long-term fundamentals, near-term headwinds continue to weigh on real estate stocks. The market-wide risk aversion, coupled with concerns about future demand and regulatory challenges, could lead to continued volatility in the sector. Analysts suggest that while the long-term growth trajectory remains intact, investors should brace for further corrections before any meaningful recovery sets in.

With the Nifty Realty index now in bear market territory, market participants will closely watch upcoming policy decisions and interest rate movements, which could dictate the sector's recovery path in the coming months.