Here's why Nifty Realty surged over 6% today
What's the story
The Nifty Realty index hit a new 52-week high, soaring nearly 6% to 835.35 on January 4, with all 10 components seeing gains. Shares of Sobha, Brigade Enterprises, and Macrotech Developers (Lodha) surged between 7% to 19%, while DLF, Godrej Properties, and Oberoi Realty climbed over 5%. Over the past year, the realty index has seen a remarkable uptrend, skyrocketing about 94%, with stocks like Prestige Estates Projects and Sobha soaring almost 180% and 120%, respectively.
Details
Factors driving the rally
Anil Rego, CEO and Fund Manager at Right Horizon, PMS, as told to LiveMint, attributes the Nifty Realty rally to significant profits in real estate companies. He said, "These enterprises have achieved unprecedented residential sales bookings, alleviating apprehensions about the potential negative effects of increasing mortgage rates on demand." Rego also noted that real estate firms are set for substantial project launches in the second half of the current fiscal year.
What Next?
Robust economic expansion and interest rate reductions
A strong economic outlook, along with potential interest rate cuts, is expected to fuel the real estate sector. Projections by various analysts show an average of 7% expected GDP growth for the entire fiscal year. Industry experts predict that this growth trajectory will maintain the momentum in home loan uptake over the next 12-18 months, driving demand, especially in the affordable housing segment.
Insights
Top picks and management changes
Motilal Oswal Financial Services named Sobha as one of its top picks for 2024 with a target price of Rs. 1,400. The brokerage firm believes Sobha will offer further growth visibility as it unlocks its vast land reserves and explores opportunities beyond its existing land bank. In other news, Oberoi Realty shares rose around 7% after announcing the appointment of Nimit Gala as General Manager - Investor Relations.
Facts
Acquisitions and developments
Godrej Properties stock rallied 7% following the company's announcement of acquiring a four-acre land parcel in Bengaluru for a luxury housing project, estimated to have a developable potential of about 0.7 million square feet of saleable area. Macrotech Developers's shares jumped over 8% after finalizing agreements to acquire a 100% stake in Goel Ganga Ventures India Private Limited (GGVIPL), making it a wholly-owned subsidiary.