Bengaluru-based Realty Stocks Plunge: Impact of IT Sector Concerns
Stock market today: Bengaluru-based realty stocks traded mostly lower on Thursday, February 12, amid growing concerns among IT companies about potential disruption from artificial intelligence (AI).
Shares of Bengaluru-based developers Prestige Estates and Puravankara were down up to 2% on Thursday. Meanwhile, other realty stocks such as Sobha and Brigade Enterprises declined by up to 1% on February 12. Shares of Oberoi Realty and Macrotech Developers (Lodha) were also trading lower, posting marginal losses.
Why are Bengaluru-based realty stocks falling?
According to market experts, Bengaluru-based realty stocks are declining primarily due to a combination of sector-specific and macroeconomic concerns rather than any single company-specific event. “Bengaluru is an IT hub, and a weak outlook for the IT industry is expected to hit the sales volumes of Bengaluru-based real estate companies. Therefore, in the wake of the weak outlook for the IT industry, hitting real estate sales in the Indian IT hub, Bengaluru, real estate stocks are under pressure,” said Avinash Gorakshkar, a SEBI-registered fundamental equity expert.
A major key trigger is weakness in the IT sector, which is a significant driver of housing demand in Bengaluru. Fears around AI-led disruption, slower hiring, and potential job rationalisation in technology companies have raised concerns about future residential demand, particularly in mid-to-premium housing segments where tech professionals form a large buyer base.
IT stocks faced intense selling pressure on Thursday, due to a steep decline in global technology shares amid fresh concerns over potential disruptions from AI-driven start-ups. Additionally, stronger-than-anticipated US jobs data dampened expectations of an imminent rate cut by the US Federal Reserve, further weighing on market sentiment.
According to Seema Srivastava, Senior Equity Research Analyst (fundamentals), SMC Global Securities Limited, broader market risk-off sentiment has also contributed, as benchmark indices have softened, prompting investors to reduce exposure to cyclical sectors like real estate. “Additionally, after a strong multi-year rally in property stocks, valuations had become relatively elevated, leading to profit-booking and correction,” Srivasatava said.
She further opined that recent pre-sales data and management commentary across the sector have been mixed, suggesting that the housing cycle may be entering a more mature phase with slower incremental growth. 'Concerns around inventory build-up, working capital pressures, and moderation in new launches have further weighed on sentiment. Together, these factors are contributing to the current decline in Bengaluru-focused real estate stocks,' she added.
Why are IT stocks falling?
Indian IT stocks witnessed a sharp decline today amid a combination of macroeconomic headwinds and sector-specific concerns. Robust US jobs data dampened expectations of imminent rate cuts, while ongoing fears of AI-driven disruption continued to pressure the earnings outlook for traditional IT services firms. At the time of writing the report, Mahindra & Mahindra, Infosys, and Tata Consultancy Services shares were trading 5% lower. Meanwhile, other IT stocks like Wipro, HCL Tech were also down 4%.
Last week, IT stocks had already faced significant selling pressure as concerns mounted that rapid advancements in artificial intelligence could heighten competition. The anxiety intensified after Anthropic introduced a legal-focused AI tool, sparking fears of potential disruption for established software companies.
