Current reports indicate that real estate shares are facing substantial selling pressure. On the previous Tuesday, the BSE real estate index closed at 1,822.14, reflecting a decline of 3%.
The downturn in real estate shares can be attributed to elevated interest rates combined with a sluggish real estate market. Investors in this sector are increasingly selling their holdings largely due to profit-booking activities. The sentiment among real estate investors was further dampened by September's inflation rate, which surged to 7.8%, the highest in ten months.
The 3% drop in real estate shares marked the steepest decline among all sectors. Major real estate firms saw significant impacts on their stock prices, with DLF shares trading at Rs.208, down by 4.3%. Similarly, Unitech shares fell to Rs.25.65, experiencing a decline of 4.8%.
Anant Raj Industries faced the heaviest loss, plummeting by 6.8%, while HDIL followed closely, down by 5.7%. Many investors are opting to divest their real estate shares amid concerns of no immediate recovery prospects.
Mr. Deven Choksey, managing director of KR Choksey Securities, commented that a recovery in the market would hinge on lowering interest rates and an overall improvement in economic conditions.
Despite this downturn, the BSE real estate index previously outperformed the Sensex in September with an impressive 22% increase, while Sensex only managed a modest growth of 7.6%.
As market dynamics shift, stock investors are moving towards technology and defensive stocks, showing a decidedly negative outlook on real estate stocks. Both the banking and capital goods sectors are also facing negative investor sentiment.
S P Tulsian, an independent stock market analyst, believes real estate stocks might see up to a 5% improvement from current levels, although he cautions that some specific stocks might continue to decline further.
A notable exception during this downturn was DB Realty, which rose 5% to reach Rs.103.65, primarily because Rare Enterprises, led by Rakesh Jhunjhunwala, purchased 1.25 million shares of DB Realty.
Stock market experts are advising investors to approach the purchase of real estate shares with caution, as profit potential may not match the levels previously experienced.