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Nifty Realty soars 6% in sharpest single-day rally since October 2021

On October 7, 2021, the index had rallied 6.2 per cent. Today, it was quoting at its highest level since June 2008, BSE data showed

China property segment, realty, flats
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Deepak Korgaonkar Mumbai

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Shares of real estate companies were on a roll on Thursday as the Nifty Realty index surged 6 per cent, posting its sharpest single day rally since over two years. 
At 02:15 PM; Nifty Realty index held gains of 6.1 per cent as compared to a 0.63 per cent rise in the Nifty 50.

On October 7, 2021, the index had rallied 6.2 per cent. Today, it was quoting at its highest level since June 2008, BSE data showed.

In the past two months, the Nifty Realty index has surged 30 per cent on promising outlook for demand and sales. In the past nine months, it has more than doubled or zoomed 114 per cent.

Among individual stocks, Sobha, Macrotech Developers (Lodha), Godrej Properties and DLF were up 6.5-19 per cent.

Purvankara, Kolte-Patil Developers, Indiabulls Real Estate, Suntech Realty, Keystone Realtors (Rustomjee), Hemisphere Properties India and Ajmera Realty & Infra India, which are not a part of Nifty Realty, rallied 7-17 per cent.

Sobha zoomed 20 per cent to Rs 1,339.70, also its new high, after brokerage Motilal Oswal Financial Services (MOFSL) recommended a ‘buy’ rating on the stock with a target price of Rs 1,400 per share.

After underperforming its listed peers on pre-sales growth over FY21-23, MOFSL believes Sobha is set to outperform in terms of growth given its focus on unlocking its vast land reserve and exploring external growth opportunities through its healthy balance sheet.

The outperformance is also expected to be driven by improvements in profitability. Further, visibility in the monetization of some of its large land parcels in Bengaluru will lead to a re-rating in its implied land valuation, the brokerage said. 

Shares of Brigade Enterprises (BEL) rallied 13 per cent to a new high of Rs 984.90 on the NSE in intra-day trade.

Since November, the stock of the real estate company has zoomed 60 per cent as it had reported a strong operational performance for the September quarter (Q2FY24).

With a robust pipeline of launches in Bengaluru, Chennai and Hyderabad, the management is confident that the company will sustain the momentum going forward.

Driven by BEL’s established market position and healthy launch pipeline, the residential segment is expected to remain healthy with sales seen in the range of 6.5-7.5 million sq ft (msf) in FY24, similar to FY23, according to CRISIL Ratings.

The office segment too continued to attract investors' preference owing to the resilience shown by high-quality assets, while the warehousing sector maintained its position as a growing favourite among investors.

As global challenges gradually subside, the Indian economy's resilience and the favourable economics of real estate assets are anticipated to spark a resurgence in private equity (PE) investment activities within the sector, as per Shishir Baijal, Chairman & Managing Director, Knight Frank India.

"The impetus behind India's recent dominance in office absorption is attributed to its strong economic fundamentals. The forthcoming year is poised for steady expansion, and 2024 promises to be a standout year for the office market, driven by India-facing businesses and Global Capability Centres (GCCs)," he added. 

The surge in flexible workspaces will play a pivotal role in fostering growth-oriented businesses in India. With these factors in play, Knight Frank India anticipates the office market to reach new peaks in 2024.

Furthermore, dramatic improvement in home affordability over the last decade has helped home buyers despite a steady rise in prices. 

Knight Frank India said that they can see some signs of distress in the affordable segment, which saw reduced sales volumes.

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First Published: Jan 04 2024 | 3:10 PM IST

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