The Nifty Realty index is down 12%, with market breadth largely negative. By comparison, sectors like PSU banks (Nifty PSU Bank +11%) and metals (Nifty Metal +15%) have outperformed. All 10 constituents of the Realty index are trading in the red. Signature Global (India) has seen the steepest decline at 28%, followed by Godrej Properties (22%), Brigade Enterprises (17%), and Lodha Developers (12%).
Other stocks such as Oberoi Realty, Prestige Estates Projects, The Phoenix Mills, DLF, Anant Raj, and Sobha have also fallen, declining between 5% and 11% during the same period.
January & February returns reality
The past five years have painted a gloomy picture for the realty sector, with average January returns of –4%, according to Trendlyne. Historically, even after the Budget announcement, February has seen muted gains, with average returns over the same period at –1.2%.
Within these five years, January 2025 marked the sector’s steepest decline, as the Nifty Realty index plunged 12.45%. Other years were also weak, with declines of 4.69% in 2023, 0.81% in 2022, and 2.61% in 2021. The lone outlier was 2024, when the index posted gains of over 9%.
February 2025 proved even more punishing, with the index sliding more than 13%. In 2023 and 2022, returns of minus 4.46% and minus 9.13% were recorded, respectively. However, 2024 and 2021 bucked the trend, delivering positive returns of 6.35% and 14.44%, respectively.
Ongoing tepid market sentiment has kept trades largely stock-specific, acting as a drag on broader indices. January has historically been a seasonally weak month, with the Nifty ending in the red eight times in the past 10 years. Much of this lacklustre performance is attributed to Foreign Institutional Investors (FIIs), who have been net sellers in 70% of Januarys, limiting sustained buying momentum.
Budget 2026 wishlist
One of the expectations from this year’s budget is a cap on deduction towards interest in home loan paid u/s 24(b) on self-occupied property to be increased from the current Rs 2 lakh to Rs 3-5 lakh.
While this has long been an industry demand, brokerage Nuvama Institutional Equities believes it is likely to materialise this time. It sees a positive impact of this on the real estate sector, arguing that it could boost demand in the affordable and mid-income housing segment.
2) Nuvama also expects the government to redefine ‘affordable’ in terms of price band or unit size to attract a reduced 1% GST rate on the sale of under-construction property. “The change would provide stimulus to housing demand,” it said in a budget note.
Bhavya Bagrecha, Fund Manager at Bharat Bhoomi Fund, said that the current cap on affordable housing is at Rs 45 lakh, which should be increased to Rs 75–85 lakh for metro cities like Mumbai, Delhi-NCR, and Rs 60–65 lakh for non-metros. “It is virtually impossible to find a home within the Rs 45 lakh limit in major urban centers, rendering many buyers ineligible for affordable housing benefits like lower GST rates,” she added.
3) Another demand is on the extension of the time limit and the deduction amount u/s 80EEA. While Nuvama is not too hopeful on this count, it seems the move could give a fresh impetus to the affordable housing segment if implemented.
Bajaj Broking reiterated the view, adding that real estate has benefited from a lower borrowing rate, though focus continues in terms of incremental deductions for homebuyers. It expects a reprieve for home buyers this time in the form of higher tax deductions on home loan interest.
(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)