DLF, Oberoi Realty to Sunteck Realty: Why are realty stocks skyrocketing today?

Stock market today: Realty stocks witnessed strong buying interest during Friday deals. The Nifty Realty Index surged around 2.30 percent to nearly 1,050. This rally was well supported by the intraday rally witnessed in realty majors DLF, Oberoi Realty, Brigade Enterprises, Godrej Properties, Sunteck Realty, Sobha, etc. DLF shares were the top gainers, which logged a nearly 6 percent intraday rise during Friday deals.

According to stock market experts, realty stocks are rising because they are rate-sensitive stocks. There is a buzz about a 25 bps to 50 bps US Fed rate cut in the upcoming US Fed meeting in September 2024. As RBI may choose to cut interest rates once the US Fed declares the end of the high interest rate regime, Indian bulls are betting high on realty stocks. They said the profit-booking trigger in the US dollar and US bond market has also supported the rally in Indian real estate shares.

What's fueling realty stocks?

On triggers fueling Indian realty shares, Avinash Gorakshkar, Head of Research at Profitmart Securities, said, "Real estate segment is a rate-sensitive segment. The US Fed rate cut buzz got renewed after the strong US job data on Thursday. This has dropped a hint that the US economy is in better shape and that US recession news is mere speculation, far from reality. Hence, next month, the market expects a 25 bps to 50 bps interest rate cut in the US Fed meeting. From the Indian stock market perspective, the US Fed rate cut is expected to push RBI to go for the rate cut. So, lowering the interest rates is expected to boost the demand and sales in the sector, and the rally in realty stocks should be seen from this perspective."

However, the Profitmart Securities expert maintained that rallies in real estate stocks are mere speculation until the US Central Bank gives a concrete hint.

Nifty Realty Index outlook

Speaking on the Nifty Realty Index outlook, Sumeet Bagadia, Executive Director at Choice Broking, said, “The index is looking positive on the chart pattern. It has made a crucial base at the 1,000 mark and faces hurdles at 1,100 and 1,150, respectively. So, if the index opens above the 1,000 mark and sustains above this support for a few hours on Monday next week, we can expect more upside in realty stocks next week. So, investors are advised to remain vigilant about the Nifty Realty Index and maintain buy-on-dips until the index exceeds 1,000 support.”

Disclaimer: The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.