Realty Adds Shine, Index Surges 6%

Property developers extended their winning run on the bourses after reporting strong demand in the September quarter driven by low interest rates and cheaper prices. The BSE’s Realty Index jumped 6% – the biggest sector gainer on Thursday, while the benchmark Sensex rose 0.8%.

Sobha led the gainers on Thursday, soaring 16.7% to Rs.885 after the Bengaluru-based company said in an update to stock exchanges on Wednesday that it posted the best ever sales volume in the September quarter.

Macrotech, earlier known as Ladha Developers, also exchanges on Wednesday that it posted the best-ever second quarter sales despite July-September being a week period for property sales because of monsoon and the Shraadha period – considered inauspicious for fresh purchases. Macrotech shares jumped 6.5% on Thursday.

Shares of other property developers Oberoi Realty, Godrej Properties, Prestige Estates, Brigade Enterprises, Sunteck Realty, Phoenix, DLF, India bulls Real Estate and Mahindra Life Space Developers gained 2-9%.

“We are positive on the sector as there is lot of pent-up demand and the mortgage rates are at historic lows, lot of inventory available to be sold after 8-9 years of stagnant prices,” said Gaurav Due, senior VP and head of capital market strategy at Share khan by BNP Paribas.

“Affordability is better because of increasing income levels and low interest rates. The real estate sector is probably set for a multi-year upcycle.”

Due is most bullish on Oberoi Realty and Mahindra Life Space.

So far this year, the Realty index has gained 71.4% while the Sensex has gained 25% year to date.

In a recent interview with ET, Christopher Wood, global head of equity strategy at Jefferies, said India’s residential property market is at the cusp of a five-to-seven-year bull cycle. S-ET

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