The Nifty Realty Index, a critical barometer for the real estate sector, has faced a notable correction. After reaching a peak on June 18, the index has since dropped 15%. However, on Tuesday, the index snapped a four-day losing streak, registering gains of over 2%. This pullback is significant, given the recent performance and broader market trends.
From the highs of June 18, the Nifty Realty Index retraced approximately 78% of its rally, which started on June 4. Despite this correction, the index remains above its long-term moving average (200-DMA), signaling potential long-term strength. However, it is trading below its shorter-term moving averages, the 20-DMA and 50-DMA, indicating some near-term weakness.
The recent rebound is not solely due to a recovery in the overall market but also buoyed by the expectation of some relief measures by the government. A recent report highlights that the government is actively considering options to address the real estate sector’s concerns following the latest budget announcements. While no final decisions have been made, the proposals under review are promising.
One of the key measures under consideration is the introduction of a grandfathering clause. This clause would allow transactions completed before July 2024 to continue benefiting from the existing indexation rules. Additionally, there is a murmur that the government is exploring the possibility of allowing taxpayers to choose between the old and new Long-Term Capital Gains (LTCG) regimes for real estate transactions.
In her budget speech on July 23, Finance Minister Nirmala Sitharaman proposed significant changes to the taxation of real estate transactions. The proposals include the removal of indexation benefits and a reduction in the LTCG rate from 20% to 12.5%. These changes aim to simplify the tax structure and make real estate investments more attractive.
Since the budget announcement, the Nifty Realty Index has experienced a mixed performance, gaining and declining in five sessions each over the past ten trading days. Despite the volatility, certain stocks have emerged as top gainers.
Brigade Enterprises has been a standout performer, gaining as much as 8% despite reporting a weak operating performance during the June quarter. The company saw a 10% decline in pre-sales for the April-June period and a 56% drop from the March quarter, with volumes declining by 28% compared to last year.
Other notable gainers on the Nifty Realty Index include Prestige Estates and Godrej Properties, both trading with gains close to 5%. These gains highlight investor optimism and the potential for recovery in the real estate sector.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
We're Live on WhatsApp! Join our channel for market insights & updates
Get the link to download the App
