Realty gets a valuation check, stocks plunge
Property developers are losing flavour on Dalal Street as risk-off sentiment in equities is prompting investors to cut exposure to these shares considered richly valued after the two-year rally.
The Nifty Realty index, comprising 10 top shares in the sector, plunged 4.6% on Wednesday after dropping 4.1% the previous day. The Nifty 50 was up 0.6% at close on Wednesday.
Macrotech Developers dropped 6.1%, whereas Oberoi Realty, Sobha, Prestige Estates Projects and Godrej Properties were down over 5% on Wednesday.
«After Covid, the real estate sector had seen supernormal growth, and due to this high base and a recent normalisation in growth, the stocks have fallen,» said George Thomas, fund manager-equity, Quantum AMC. «The market had extrapolated the growth due to which most stocks had reached high valuations which are now coming off.»
In 2024, all Nifty Realty index stocks, barring Mahindra Lifespaces, jumped 14-65%. All stocks in the sector gained 17-154% in 2023. The benchmark realty index soared 81% and 34% in 2023 and 2024, respectively.
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