Nifty Realty up for 2nd day as Phoenix Mills, Macrotech Developers, others see sharp gains; what's fueling the rally?

Shares of Indian real estate companies continued their upward trajectory for the second consecutive session today, building on the momentum from the previous day's sharp rally. In the last trading session, the Nifty Realty index jumped 6.76%, recording its best intraday gain since October 2021.

This significant leap can be attributed to robust sales figures reported by real estate developers in the December quarter. The positive momentum is further fueled by encouraging data on loan disbursements announced by banks, contributing to the overall rally in the real estate sector. : In today's trading session, the Nifty Realty index soared an additional 21.7 points, reaching a 52 week high of 863 points.

Six out of 10 stocks are currently trading in the green, with Phoenix Mills leading the way with a notable gain of 5.2% at 2,487 apiece. Other top performers include Swan Energy (up 1.8%), Brigade Enterprises (up 1.7%), Mahindra Lifespace Developers (up 0.6%) and Oberoi Realty (up 0.2%) witnessed its shares reach a new record high of 1,198.9 apiece in today's trade.

The surge follows the company's announcement of achieving the best ever Q3 pre sales of 34.1 billion, reflecting a substantial YoY growth of 12%. "For the first three quarters of FY24, our pre sales are 103 billion, showcasing YoY growth of 14% and keeping us on track to deliver our pre sales guidance of 145 billion for FY24," the company said in today's exchange filing.

After a stellar 16% surge in the previous day, shares of Sobha in today's session are trading in the red with a cut of 1.72% (as of 12:10 PM) amid profit booking. The company also posted a strong set of numbers for the December quarter. : The company posted its highest ever quarterly sales value of 19.52 billion in Q3FY24.

This represents a remarkable growth of 37.0% over Q3 FY23 and 13.2% compared to the preceding quarter (Q2 FY24). Record Sales The Indian residential estate market recovered sharply in 2023 due to various factors, such as a pause in rate hikes, a drop in key building material prices, increased buyer interest, and rising rental costs.

Despite significant hikes in property prices and mortgage rates, the housing sector is currently witnessing strong demand. Following the RBI's pause in rate hikes in April last year, real estate stocks embarked on a substantial rally, propelling the Nifty Realty index to an impressive gain of 118% to date.

On the other hand, India’s steady march on growth continues, even in the backdrop of widening geopolitical issues and apprehensions of an economic slowdown in the developed countries, thereby reinforcing further optimism in the economy. In the September quarter (Q2FY24), the Indian economy showcased robust growth, surpassing expectations with a remarkable 7.6% expansion, solidifying its position as the world's fastest growing economy.

The substantial uptick in Q2FY24 has prompted the Reserve Bank of India (RBI) to revise its FY24 GDP forecast to 7%, projecting an average growth of 6.5% for FY25 in the initial three quarters. Against this economic backdrop, the demand for residential real estate is witnessing a robust upswing, resulting in a substantial surge in sales.

According to housing brokerage firm PropTiger, housing sales in the top eight cities saw a remarkable 33% increase, reaching nearly 4.11 lakh units in 2023—the highest sales volume since 2013. In 2022, housing sales stood at 3,08,942 units. Stellar Gains Amidst this strong resurgence, stocks in the real estate sector have delivered exceptional returns, with all 10 constituents of the Nifty Realty index recording stellar gains over the last one year period.

: Leading the pack, Prestige Estates Projects emerged as the top gainer with an impressive return of 189.9%, followed by Sobha (up 118.5%), Macrotech Developers (up 105.9%), Brigade Enterprises (up 105.7%), and (104.3%). Livemint tops charts as the fastest growing news website in the world to know more.

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