Real Estate Stocks Drop Up to 3%, Weighing Down Nifty Realty Amid Broad Market Selloff

Shares of real estate companies faced significant selling pressure on February 14, dragging the Nifty Realty index down by nearly 2% as of 12:26 PM.

Phoenix Mills emerged as the biggest loser, declining 3.3% and nearing its 52-week low. Raymond and Godrej Properties followed suit, each dropping over 3%. Raymond’s stock was trading around ₹1,373 per share, while Godrej Properties hovered at ₹1,962 per share—also close to its 52-week low—after a steep 32% decline over the past six months.

Oberoi Realty, Mahindra Lifespace Developers, share price and Sobha’s share price also witnessed sharp declines of over 2%, while Prestige Estates and heavyweight DLF saw their share price dip by more than a percent. Given its significant weightage in the index, DLF’s fall further contributed to Nifty Realty's downturn.

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Brigade Enterprises and Lodha (Macrotech Developers) remained in the red, though their losses were relatively minor.

Broader Market Selloff

The decline in real estate stocks was part of a broader market correction, with the Sensex plunging over 500 points to 75,603, while the Nifty slipped by nearly 196 points to 22,836. All sectoral indices were trading in negative territory, reflecting a bearish sentiment across the market.

Several factors contributed to the selloff. One key reason was investor concern over US President Donald Trump’s plan to impose reciprocal tariffs on countries running trade deficits with the US. This move raised fears of potential trade disruptions and economic instability, leading to a global risk-off sentiment.

Additionally, foreign institutional investors (FIIs) have been pulling out funds from Indian equities, further exacerbating the downward pressure. The sustained outflows signal declining confidence among foreign investors, likely influenced by geopolitical uncertainties, global monetary policies, and inflation concerns.

Impact of Weak Q3 Earnings

Another factor weighing on real estate stocks was the impact of third-quarter earnings. Several companies in the sector reported weaker-than-expected results, reflecting slower sales, rising input costs, and margin pressures. Despite strong demand in certain pockets of the real estate market, elevated interest rates and liquidity constraints have hindered the sector’s overall growth.

DLF, being one of the most influential players in the real estate index, saw its stock dip, further dragging down Nifty Realty. Market analysts believe that despite a long-term positive outlook for the real estate sector, short-term volatility is expected due to macroeconomic concerns and investor sentiment.

Outlook for the Real Estate Sector

The Indian real estate sector has experienced strong momentum over the past few years, fueled by rising homeownership demand, government initiatives such as affordable housing schemes, and increased investments in commercial real estate. However, the sector remains highly sensitive to interest rate fluctuations and liquidity conditions.

Experts suggest that any potential correction in interest rates by the Reserve Bank of India (RBI) in the coming quarters could provide much-needed relief to developers and homebuyers. Additionally, government policies aimed at improving infrastructure, boosting housing affordability, and easing credit availability could help stabilize the sector in the medium to long term.

For now, market participants remain cautious, keeping a close watch on global economic developments, FII activity, and upcoming financial results to gauge the sector’s direction.