Real Estate Stocks Tumble for Second Consecutive Day Amid Profit Booking
The Nifty Realty index fell nearly 1 percent, marking the second day of losses for real estate stocks as investors booked profits after recent gains.
Real EstateNifty RealtyProfit BookingRbi Rate CutStock MarketReal EstateJun 10, 2025
Notably, real estate stocks had seen a massive surge recently, following the Reserve Bank of India's (RBI) announcement of a substantial rate cut. On June 6, RBI Governor Sanjay Malhotra announced that the Monetary Policy Committee (MPC) had decided to cut the central bank's policy repo rate by 50 basis points to 5.5 percent. This rate cut was higher than the 25-bps reduction estimated by several analysts.
A steeper rate cut is expected to lower interest rates on home loans, which will boost demand and improve the margins of real estate players. Additionally, it may ease borrowing costs for developers, aiding project financing and expansion. Expectations of a major boost from the rate cut sent the stocks significantly higher, with the Nifty Realty closing nearly 5 percent higher after the central bank's announcement. However, the euphoria seems to have faded, with investors now racing to book profits after record gains.
Among the companies affected, Sobha and Macrotech Developers (Lodha) shares dropped over 2.5 percent, while Prestige Estates shares fell over 2 percent. Brigade Enterprises and Anant Raj shares fell over 1.6 percent, while DLF and Raymond shares were trading in the red, down nearly 1 percent. Bucking the trend, Phoenix Mills and Oberoi Realty shares gained over 1 percent, and Godrej Properties shares saw marginal gains.
According to JM Financial's latest report, Indian listed real estate developers have delivered an impressive compound annual growth rate (CAGR) of 25% in bookings over FY22-25, with bookings growing at about 15% year-over-year (YoY) in FY25. While growth may moderate due to the high base, a healthy double-digit growth scenario is expected to continue in the near term. The residential cycle numbers are expected to remain stable, with a healthy demand-supply scenario characterized by high absorption and comfortable inventory levels.
Additionally, the cumulative repo rate cuts of about 100 basis points since February 2025 should directly enhance affordability and financial viability of projects, particularly in interest rate-sensitive categories like mid-income and affordable housing. DLF, with its steady annuity cash flows and fully paid-up land banks, remains extremely well-placed to scale up across segments and newer geographies and is the top pick in the space. At current levels, Sobha, Keystone, and Embassy REIT are other preferred names.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Frequently Asked Questions
Why did real estate stocks fall for the second day in a row?
Real estate stocks fell for the second consecutive day as investors booked profits after recent gains, following the RBI's substantial rate cut.
What was the impact of the RBI's rate cut on real estate stocks?
The RBI's rate cut of 50 basis points to 5.5% boosted real estate stocks, pushing the Nifty Realty index up nearly 5 percent before investors started booking profits.
Which companies saw the biggest drops in their stock prices?
Sobha and Macrotech Developers (Lodha) saw their shares drop over 2.5 percent, while Prestige Estates shares fell over 2 percent.
What does JM Financial predict for the real estate sector?
JM Financial predicts a healthy double-digit growth scenario for the real estate sector, with a stable demand-supply scenario and improved affordability due to repo rate cuts.
Which companies are recommended by JM Financial?
JM Financial recommends DLF, Sobha, Keystone, and Embassy REIT as top picks in the real estate sector.
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