Real Estate Shares Plunge Amid IT Sector Uncertainty: Prestige Estates and Others Down up to 6%
Shares of real estate firms saw a significant decline on Friday, aligning with the broader weakness in the information technology (IT) sector. Prestige Estates Projects Ltd, DLF, and Godrej Properties were among the major losers, with some stocks dropping up to 6 percent. The Nifty realty index fell about 4 percent during the session, following a 1.5 percent decline in the previous session on Thursday.
In the Nifty realty index, nine out of 10 constituents traded in the red, with the exception of Signatureglobal (India), which saw a 5 percent rise. The selling pressure in realty shares is largely attributed to the sharp sell-off in IT stocks this week. Concerns over the impact of artificial intelligence (AI) on IT jobs and the sector's traditional business model have weighed heavily on market sentiment.
The IT sector, which has been under pressure for the past year due to macroeconomic concerns, tariff uncertainties, geopolitical tensions, and weak discretionary spending, is facing a new challenge from AI-driven automation. This technology has the potential to automate routine tasks, shorten delivery timelines, and disrupt the headcount-based outsourcing model that many Indian IT firms rely on. Growing AI adoption could also affect new deals and revenue growth, leading to a decline in the IT index by 11.4 percent this week and 16.6 percent so far in 2026, surpassing the 12.6 percent fall recorded in the entire previous year.
Analysts at Bajaj Broking Research noted, 'Waning expectations of a near-term US rate cut and evolving concerns over potential disruptions from AI are intensifying the sell-off in IT stocks, hurting market sentiment.' Sunny Agrawal, head of fundamental research at SBI Securities, added that investors are worried about the potential for AI technologies to automate complex tasks across various functional areas, affecting traditional IT services and outsourcing business models. He also highlighted the threat from AI-led start-ups, which could challenge the market share of established IT firms.
The IT workforce is a significant buyer base for urban housing, and fears of a hiring slowdown or job losses in the IT sector could negatively impact demand for residential properties. This, in turn, is putting pressure on realty shares. The decline in the IT sector is not just a local concern but a global one, as it reflects broader economic trends and technological advancements that are reshaping industries worldwide.
In summary, the decline in real estate shares is a direct reflection of the uncertainties facing the IT sector. As the IT industry grapples with the challenges posed by AI and other macroeconomic factors, the real estate market is bracing for potential changes in housing demand, particularly in major urban centers where IT companies are concentrated.
