Lodha, Godrej Properties, other shares slide as Nifty Realty hits two-month low; here's why

Shares of real estate companies, including Lodha Developers and Godrej Properties Ltd, came under sharp selling pressure in Friday's trade, with the Nifty Realty sub-index falling to a more than two-month low.

Godrej Properties was down 7.45 per cent at Rs 1,732.60, while Lodha Developers declined 5.57 per cent to Rs 1,098.60 at the time of writing.

Nifty Realty touched a two-month low during the session, with all its constituents trading in the red.

Other realty stocks, including DLF Ltd, Prestige Estates Projects Ltd, The Phoenix Mills Ltd, Anant Raj Ltd and Oberoi Realty Ltd, were also trading lower.

Ravi Singh, Chief Research Officer at Master Capital Services, said, "Realty stocks came under heavy selling pressure on Friday, with the Nifty Realty sub-index falling sharply to hit a more than two-month low. Godrej Properties, Lodha and other major real estate names led the decline as rising global bond yields and renewed concerns over interest rates weighed on sentiment. The selloff followed a rise in US inflationary pressures, particularly from higher energy prices, which strengthened expectations of further monetary tightening by the Federal Reserve."

Singh added, "US 10-year Treasury yields moved close to 5 per cent, while Indian benchmark 10-year bond yields crossed 7 per cent, reaching their highest level in more than three months. Higher borrowing costs could weigh on housing demand and increase financing costs for developers, putting pressure on realty valuations. The sector was also affected by weaker-than-expected Q1 results from some companies, adding to concerns over near-term earnings performance."

Echoing a similar view, Kranthi Bathini, Equity Strategist at WealthMills Securities, stated, "The realty sector is interest-rate sensitive, and we are seeing a sharp drop in the sector."