Realty Index Touches All Time High After Record Home Sales by Godrej

In a market that has been largely obsessed with the rally in metal, FMCG and financial stocks, the realty story has been ignored. But the returns on some of realty stocks have been amazing. The Nifty Realty Index gained 8.6% on 22-Sep and it gained nearly 15% in 3 days. To top it all, the Nifty Realty Index is already trading at an all-time high. In the last 1 year, the Nifty Realty index is up 122%.

The table below captures the spike in major realty stocks from the lows of last one-year.
 

Data Source: NSE

The outperformance of realty companies in the last one year has been absolutely emphatic. The latest trigger came when Godrej Properties managed to sell property bookings worth Rs.575 crore in a single day, on launching its NCR project. The outperformance has been visible across companies that are prominent in key realty markets of India like Mumbai, NCR and Bengaluru. These are the companies that benefited the most.

The state governments have also helped the cause. For example, Mumbai alone is expected to see about 7,000 property registrations in Sep-21. Karnataka state has cut stamp duty on mid-range flats from 5% to 3%. Mumbai had adopted a similar strategy of waiving registration charges for properties some time ago.

Are there more fundamental triggers?

Rates are at historic lows with home loans available at around 6.6% for high-rated borrowers. There are a lot of global credit funds that have become active in India and are trying to fill the void left by NBFCs in realty funding. The net result is that Indian realty is finally looking up after a long spell of quiescence. That is good for asset classes overall.

Also Read: NSE Revises Stock Selection Criteria for Nifty Indices