However, with such an outperformance, is there still time to enter into fresh investments in the sector? Or would it be wise to book some profits?
Sudeep Shah, Deputy Vice President and Head of Technical & Derivatives Research at SBI Securities, highlights that although the Nifty Realty index saw some profit booking after its peak of 1,049.50 on June 9, the index continues to trade above its key short- and long-term moving averages, indicating that the upward trend is intact.
Shah further notes that Nifty Realty has managed to hold above its 20-day exponential moving average (DEMA) in three out of the last seven sessions, a strong signal of ongoing positive momentum.
He expects the level of 990 to act as strong support, while a move above 1,040 could propel the index towards 1,140-1,150 levels.
Among the constituents, Shah favors Oberoi Realty and Prestige Estates as top picks in the real estate space.
He notes that Oberoi Realty is trading above its short-term moving averages, with its RSI and ADX indicators showing strong bullish momentum. A break above Rs 1,970 could see the stock testing Rs 2,020-2,030 levels.
Similarly, Prestige Estates is showing steady movement and could see continued upside, potentially reaching Rs 1,890-1,900 if it breaks past its resistance at Rs 1,755.
Meanwhile, Ashish Chaturmohta, Managing Director and Fund Manager at Apex PMS, JM Financial Ltd., offers a broader view of the sector, emphasizing that real estate cycles typically last 7-8 years, and the sector is currently in the middle of an uptrend.
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Chaturmohta points out that the previous down cycle has paved the way for a shift towards organized developers, giving them pricing power and improving overall realizations.
He attributes the sector’s renewed momentum to several macroeconomic factors, including lower interest rates driven by the Reserve Bank of India’s policy actions, which have made borrowing cheaper and increased affordability for homebuyers.
Another key factor is the decline in inventory levels, with current levels at 16-17 months, a significant improvement from 42 months in the previous cycle.
Chaturmohta also highlights the ongoing shift in consumer preferences, with premium housing gaining more traction over mass or affordable segments, further boosted by consistent government support, especially in terms of stamp duty stability.
Additionally, the rise of new verticals like data centers, warehousing, and Special Economic Zones (SEZs), all of which are fueling demand due to growing digital and logistics infrastructure needs.
With improved access to funding, developers are in a stronger position to capitalize on new opportunities and manage market cycles more effectively.
Outlook for the sector
Overall, the real estate sector looks well-positioned for near-to-medium-term growth, driven by favorable macroeconomic factors such as low-interest rates, strong developer financials, and healthy demand dynamics.
Analysts remain optimistic about the sector’s outlook, citing robust performance in the realty space, particularly in premium housing and urban redevelopment projects.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
