Realty Index Snaps Five-Day Losses, Gains 2% on Rate-Cut Commentary from RBI Governor

Realty Index Snaps Five-Day Losing Streak After RBI Rate Cut Signal

The Realty index rebounded sharply on November 25, rising nearly 2 percent and ending a five-session losing streak after Reserve Bank of India (RBI) Governor Sanjay Malhotra indicated that there is still room for policy rate cuts. The upbeat commentary lifted investor sentiment across real estate counters, reversing the recent slide that had pushed valuations into corrective territory.

At 2:20 pm, the Nifty Realty index was trading at 902.15, emerging as the top sectoral gainer of the day. Market experts said the rally was driven by expectations of lower borrowing costs, renewed demand optimism and a broader view that the recent decline was more of a cooling-off phase than a sign of structural weakness.

RBI Governor’s Comments Fuel Fresh Optimism for Real Estate Stocks

Real estate stocks rallied after RBI Governor Malhotra, in an interview with Zee Business, noted that macroeconomic data continues to support the case for easing.
“At the last MPC meeting in October, it was communicated clearly there is room to cut policy rates. Since then, the macro-economic data we have received has not indicated that the room to lower rates has decreased,” he said.

A potential rate cut is significant for developers and homebuyers alike. Lower policy rates translate into reduced home loan EMIs, which typically boosts residential sales, enhances affordability and strengthens sentiment around the housing cycle. The governor’s comments were therefore immediately reflected in the Realty index, which saw strong participation across mid-cap and large-cap real estate companies.

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Top Gainers in the Realty Index Rally

Real estate stocks across the board turned positive, with several counters posting sharp intraday gains:

• Brigade Enterprises jumped more than 4 percent

• Anant Raj, Phoenix Mills, and Prestige Estates rose around 3 percent each

• Godrej Properties and Sobha gained about 2 percent

• Oberoi Realty added over 1 percent

• DLF and Macrotech Developers (Lodha) climbed close to 1 percent

The rally was broad-based, underscoring the renewed confidence in the sector following days of correction-driven selling.

Analysts Say Correction Was a Healthy Reset, Not a Structural Breakdown

Over the past five sessions, the Realty index had fallen more than 6 percent, sparking concerns about whether the sector’s strong multi-quarter momentum was faltering. Analysts, however, emphasised that the correction was expected and largely valuation-driven.

“The real estate stocks fell not because the sector weakened, but because valuations went far ahead of fundamentals,” said Shiv Garg, Director at Forteasia Realty. He described the pullback as a “healthy reset”, noting that demand indicators—including bookings and pricing power—remain firmly intact. “Once Q4 numbers confirm cash flow strength and pre-sales momentum, selective names will reclaim leadership,” he added.

Ravi Singh, Chief Research Officer at Master Capital Services, echoed a similar view, emphasising that the structural story remains robust. “Supported by urbanisation, infrastructure growth and evolving consumer base, the realty sector continues to be a vital economic pillar,” he said.

Affordability Concerns and Premium Housing Slowdown Played a Role

Some analysts said the recent correction also reflected pockets of concern around affordability in key micro-markets. Premium housing, which had been a major driver of the sector’s rerating, has shown signs of slower momentum.

According to Yash Chauhan, Research Analyst at INVasset PMS, these concerns contributed to the selling pressure. However, he clarified that this does not imply a structural reversal. “Urban incomes, job additions and rental yields remain supportive. These fundamentals continue to reinforce resilience in the sector,” he said.

Budget Expectations and Policy Support Could Drive Next Leg of Rally

Looking ahead, expectations surrounding upcoming government reforms and the Union Budget may play a crucial role in shaping sentiment. Shravan Shetty, Managing Director at Primus Partners, believes that real estate stocks could surge sharply if fiscal measures help boost economic growth and improve sales.
However, he flagged two major risks: the lack of revival in the affordable housing segment and rising household debt, both of which could temper the pace of recovery.

Sector Outlook: Near-Term Volatility but Strong Long-Term Momentum

Despite the recent volatility, the long-term outlook of the sector continues to remain strong, analysts said. Structural demand in major metros, improving financial discipline among developers, and steady urban housing appetite position the sector positively for FY26.

Khushi Mistry, Research Analyst at Bonanza, said that while short-term corrections are likely to persist, underlying fundamentals remain sound. “The sector shows caution but also strong resilience despite affordability concerns and recent corrections,” she noted.

Market experts broadly agree that the Realty index will likely remain sensitive to macro signals in the coming months, especially policy decisions from the RBI. But with demand robust and developer balance sheets stronger than in previous cycles, the sector’s long-term trajectory remains upward.

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