Macrotech Developers, Godrej Properties: Real estate stocks decline; realty index slips 2%

The real estate stocks were the top sectoral losers in the noon deals on Thursday, August 1. The BSE Realty index was trading over 1.80% lower at 8,384.46 levels, while on the NSE, the Nifty Realty index was down 1.88%. All 10 constituents of the index were trading in the red. 

In comparison, the benchmark NIFTY50 index was trading 28.80 points, or 0.12% higher at 24,979.95 points. 

It's worth mentioning here that the BSE Realty index hit a 52-week high of 9,059.57 on July 18, 2024, while its all-time high level stands at 13,848.09. The milestone was hit on January 8, 2008.

The sector that has been in a lull for the longest time showed an impressive rebound in the past 12–15 months, given a host of positive factors such as infrastructure development, evolving demographics and changing lifestyles, and government initiatives such as Pradhan Mantri Awas Yojana (PMAY), among others.

Given this, real estate stocks, too, jumped during the period. Data shows that the BSE Realty index has jumped over 88% in the past 12 months, while the NSE Realty index has rallied 93% during the period.

The implementation of RERA (Real Estate Regulatory Authority) has brought about transparency in the sector. The Real Estate (Regulation and Development) Act, 2016 is an act of the Parliament that seeks to protect homebuyers as well as help boost investments in the real estate industry.

Reason behind decline in stocks

Sonam Srivastava, Founder and Fund Manager at Wright Research, says, "This change has introduced a higher tax burden for investors, potentially dampening investment sentiment and leading to a sell-off. While profit-booking might have contributed to the initial decline, the removal of indexation benefits is likely to have a more sustained impact on the realty index."