Real Estate Shares Extend Losses for 5th Day: Analysts Weigh In

The shares of real estate companies have extended losses, pushing the Nifty Realty index down more than 1 percent for the fifth consecutive session. As of 1.10 pm, the index fell to 895.45, making it one of the top sectoral losers on the stock markets today. The sectoral index has fallen 5.5 percent over the past five sessions.

Real estate stocks are not falling because the sector has weakened, but because valuations simply ran too far ahead of fundamentals, said Shiv Garg, Director of Forteasia Realty. 'Many developers doubled in 12–18 months, and now the market is unwilling to pay premium multiples without fresh triggers. Investors are rotating profits into sectors where earnings visibility is stronger,' he added.

Garg further noted that the ongoing correction in the stocks was a 'healthy reset' and not a structural reversal. 'Demand, bookings, and pricing power remain intact, but stock prices needed to cool. Once Q4 numbers confirm cash-flow strength and pre-sales momentum, selective names will reclaim leadership,' he explained.

Ravi Singh, Chief Research Officer at Master Capital Services, stated that real estate stocks have weakened despite the uptrend in the broader markets due to rising concerns over sector fundamentals. 'Operationally, the pace of construction has dropped significantly, widening the gap between new launches and actual delivery, which directly increases the risk of project delays, weaker cash flows, and margin pressure if the scenario continues over quarters,' he said.

However, Singh emphasized that the long-term outlook remains intact. 'Supported by urbanization, infrastructure growth, and evolving consumer base, the realty sector continues to be a vital economic pillar,' he added.

Yash Chauhan, Research Analyst at INVasset PMS, observed that the fall in real estate stocks despite the uptrend in broader markets 'reflects more caution than capitulation.' 'The sector entered earnings season with elevated expectations after two strong years of launches, pre-sales, and pricing momentum. But with input costs stabilizing rather than easing, and mortgage rates still sticky at the upper end of the cycle, investors are reassessing how much of the next leg of growth is already priced in. In several pockets, valuations had expanded meaningfully ahead of fundamentals, so even a mild moderation in booking velocity or collections can trigger profit-taking,' he explained.

The recent correction also mirrors concerns around stretched affordability in key micro-markets and a slower pick-up in premium housing, which had driven much of the sector's rerating, Chauhan added. However, this does not indicate a structural reversal, as underlying demand indicators such as urban incomes, job additions, and rental yields remain supportive.

Shravan Shetty, Managing Director at Primus Partners, attributed the correction to margin pressure due to declining sales and input cost escalation. He called the current correction timely after the sharp rise following the COVID-19 pandemic. 'We expect there to be a breakout and stocks to gain if budget and government reforms help increase economic growth and sales pick up. There still remains a risk with the affordable segment not seeing a pickup and household debt rising,' he concluded.

Pravesh Gour, Senior Technical Analyst at Swastika Investmart, noted that real estate stocks have been falling for the past few sessions due to a combination of valuation concerns, demand-side worries, and sector-specific pressures. 'After a strong multi-year rally, many realty counters had become overstretched and were trading at rich valuations, making them vulnerable to profit-booking. Even minor negative cues can trigger selling when valuations are high,' he said.

'Some major developers have reported weaker-than-expected quarterly earnings, with pressure on profitability and slower pre-sales growth, raising questions about whether current valuations are justified. Additionally, uncertainty around the pace of future rate cuts is weighing on the sector since real estate is highly sensitive to interest rates affecting both homebuyer EMIs and developer borrowing costs,' Gour added.

While near-term volatility persists, structural demand in metros and positive financial discipline among developers indicate a positive outlook into FY26, despite recent corrections and affordability concerns, said Khushi Mistry, Research Analyst at Bonanza. This suggests caution but underlying resilience in the sector, she added.

The Nifty Realty index is showing clear short-term weakness, with price action slipping below key moving averages and momentum indicators turning decisively bearish, Gour noted. The index has broken below the 20-day, 50-day, and 100-day SMAs, and is now testing the 200-day SMA zone, indicating a shift from a previously sideways-to-positive structure into a corrective trend. Recent candles show strong red bodies, reflecting persistent selling pressure. Volume has picked up slightly on down-moves.

'Overall, the index has shifted into a short-term downtrend, with the loss of multiple moving averages and weakening momentum indicating vulnerability to further declines. Any recovery attempt is likely to face resistance near the 920–940 zone, where several moving averages converge. Unless the index reclaims these levels with strong buying, the bias remains negative, and the real estate sector may stay under pressure in the coming sessions,' Gour concluded.

Top losers on the Nifty Realty index today include Anant Raj shares, which fell nearly 3 percent to trade at Rs 594.35 apiece. Brigade Enterprises and Oberoi Realty shares fell more than 2 percent each. Godrej Properties and Prestige Estates shares fell around 2 percent each, while Sobha and Macrotech Developers (Lodha) shares fell well over 1 percent each. Heavyweight DLF shares were down around 1 percent.