Real estate stocks have been underperformers in recent years as the sector has been plagued by falling demand, unaffordability and high debt.
Mumbai: Shares of property developers might be on the cusp of a sharp run-up with the Nifty Realty index giving a breakout on Monday after 10 years of moving in a tight band. Analysts are betting on companies with stronger balance sheets such as Godrej Properties, Prestige Estates and DLF among others, which seem to be better poised to benefit from the likely rebound in the sector’s prospects.
The Nifty Realty Index rose 3.6% on Monday to its highest level since 2011.
“Good momentum is visible in the entire realty sector, and it has been making higher highs - higher lows for the last six trading sessions with good trading and delivery volumes,” said Chandan Taparia, derivatives & technical analyst at Motilal Oswal Financial Services.
“Godrej Properties, Indiabulls Real Estate, DLF, and Sobha look strong on daily, weekly, and monthly time frames for an upside of 10-15% in the near term,” said Taparia. Top real estate stocks such as DLF, Godrej Properties, Oberoi Realty, Macrotech Developers and Sunteck Realty have rallied between 8% and 20% since July 1 compared to a tepid Nifty.
Real estate stocks have been underperformers in recent years as the sector has been plagued by falling demand, unaffordability and high debt. Since January 1, 2018, the Nifty Realty index rose 10% compared to the 51% return in the Nifty index.
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Money managers say the sector is in the process of revival due to weaker prices and record-low interest rates. Organised large developers would benefit the most.
