Real Estate Shares Plunge as Nifty Realty Tumbles to Two Month Low

The real estate sector stocks were the biggest losers on the stock market during the September 11 market plunge with Nifty Realty index plunging to its lowest point in more than two months. 

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At 9:56am, the index was down by 4.36% to stand at 834. The two worst-performing stocks included Godrej Properties and Lodha Developers whose respective losses were at 6.2% and 6%. The Prestige Estates was trading at 4.6% while Oberoi Realty and DLF slumped by 4.24% and 3.83% respectively.  

This steep fall was due to renewed concerns about inflation and interest rates in America with oil prices and bond yields on the rise. 

Rate Worries Return After US Inflation Data 

The latest US producer-price numbers showed energy costs putting renewed pressure on inflation in August. That has brought the prospect of another Federal Reserve rate increase back into focus. 

Expectations in the interest-rate market reflected the change in mood, with federal funds futures pointing to a greater than 70% probability of a rate hike the following week. 

Bond markets were feeling the strain as well. The US Treasury bought back fewer securities than investors had anticipated, taking the 10-year Treasury yield close to 5%. 

Oil’s rise added to the unease. Higher crude prices have intensified inflation concerns at a time when bond yields are already climbing, creating a tougher environment for equities. 

Selling Spreads Beyond Property Shares 

The nervousness was not confined to real estate. Nifty Metal lost 2.7% as concerns around US monetary policy filtered through the broader market. 

Indian bonds also came under pressure in early trade. The benchmark 10-year government bond yield moved past 7%, reaching its highest level in more than three months as rising oil prices and higher US yields weighed on sentiment. 

For markets, the next important reading will come from US consumer inflation data due at 1230 GMT. After the latest producer-price numbers revived concerns about another rate increase, the CPI report could offer a clearer indication of the Federal Reserve’s next move.