Lock Stock And Barrel

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Indian realty stocks have finally arrived in armour plated vehicles. Even as major stock markets globally are feeling the ripples of Evergrande's financial downfall, the Nifty Realty Index has jumped 22% through the last three trading sessions. 

Zoom In Please

This year, Indian realty stocks have displayed stellar performance with the Nifty Realty index gaining 57% so far, against a much lower 27% gain in the benchmark index, Nifty50. 

While all kinds of stock tips do the rounds, experience will tell you that ultimately, for a sector's stocks to perform well, the sector itself has to be on a growth path. 

The realty pack thus, is mirroring to a large extent, what's happening on the ground. 

Tailwinds After Ages

The realty index's recent bull run can be owed to the resurgence in demand due to low interest rates and supportive government policies. Proptech and the scale it brings to the sector is also one of the reasons propping up the bullish movements. 

To top it all, consolidation in the developer space over the last few years has weeded out a lot of risk. 

Proof Is In The Numbers

Per a recent report by brokerage Motilal Oswal Financial Services, more than 6,000 units have been registered in the first 21 days of September, surpassing the September 2018 total of 5,913 units.

"While registrations will begin to drop with the advent of 'Shraad,' even if 50-100 units are registered every day, overall registrations will be nearly 7,000 units which will be a record in the last decade," Motilal Oswal quoted to the press. 

Zooming Out

Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities points out other factors powering sector growth. 

Taking cues from the Maharashtra government's successful implementation of the reduction in stamp duty, Karnataka has reduced stamp duty to 3 percent from 5 percent. Such moves by state governments will encourage middle-class buyers to probably make that pending home purchase. 

"Income growth overtook the average rise in the price of properties in the last few years and that is helping the residential real estate market to revive across the country. Affordable housing has consistently been on the central government’s agenda ever since the policy on 'Housing for All by 2022',", Vakil said to Moneycontrol. 

Other experts collectively feel that since the sector has given it everything to recover from almost six years of poor performance, this sweet spot is likely to continue. 🤞