Realty Stocks Experience Decline Due to Profit Booking, Godrej Properties Drops Over 4%
The real estate sector faced a dip as profit booking continued for the third consecutive day on September 24. Godrej Properties and Oberoi Realty were among the top losers on the Nifty Realty Index. At 2:46 pm on Wednesday, the Nifty Realty fell by 2.48 per cent or 22.65 points, settling at 890.70, indicating a negative trend for the trading session.
This decline comes after a strong performance in September, where realty stocks rose for six out of seven sessions, driven by rate cuts by the Federal Reserve and GST reforms. On September 24, at 2:55 pm, Godrej Properties was down by 4.12 per cent, and Oberoi Realty fell by 2.76 per cent.
In the context of profit booking in real estate stocks, Nuvama Institutional Equities noted that the sector should prepare for volatility due to several challenges, including a lack of middle-income housing and a decline in housing affordability, as well as slow volume growth. According to their report, 'We believe volatility shall persist, and reckon stocks shall continue to be range-bound with downside protected by falling mortgage rates even as the upside is capped by valuation/volume growth concerns.'
The brokerage firm also highlighted that sales volumes dropped between June 2024 and May 2025. Rising home prices have reduced affordability, with premium and luxury segments dominating sales, leading to a narrow housing cycle. They expect price increases to slow down, which could reduce investor-driven demand.
The report further noted that the National Capital Region (NCR) and Pune are the strongest markets, with inventory levels of just 10 and 13 months, respectively. Other cities have higher inventory levels, ranging from 17 to 21 months, except for Hyderabad, which has 26 months of inventory. Nuvama anticipates that real estate stocks will continue trading within a limited range, with volatility persisting. Falling mortgage rates might soften the downward pressure, but concerns around valuations and volume growth will likely restrict upward movement.
In a separate note last week, Nuvama suggested that the market consistency seen from FY21 to FY24 may no longer continue. The brokerage believes that Bengaluru and Chennai’s housing markets still have room for growth, while Hyderabad may have already peaked. Regarding the Mumbai Metropolitan Region (MMR), the report describes it as being in a mid-cycle phase. Pune, meanwhile, appears to be experiencing 'growth fatigue,' while Gurugram is dealing with challenges related to housing affordability.
