Shares of real estate companies fell sharply on Monday, December 8, as investors booked profits following the Reserve Bank of India’s (RBI) 25-basis-point repo rate cut on Friday. The NIFTY Realty index snapped its two-day winning streak, falling as much as 4% to hit an intraday low of 857, marking the sector’s biggest setback in recent sessions.
The index had gained momentum over the past two trading days ahead of RBI’s monetary policy meeting, rising by as much as 0.88%. But Monday saw broad-based selling across all 10 constituents of the NIFTY Realty index. Godrej Properties led the declines with a 3.74% drop, while other major players including Prestige Estates, Anant Raj, DLF, Sobha, Macrotech Developers, Brigade Enterprises, and Oberoi Realty saw losses between 1.87% and 3.68%.
The market reaction came after RBI’s Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, decided to reduce the repo rate by 25 basis points to 5.25%—its lowest level in three years. This move brings the cumulative repo rate cuts in the current financial year to 125 basis points. The decision comes after the MPC had maintained a pause in the previous two meetings, signaling a careful approach to monetary policy.
The MPC maintained a neutral stance even as it lowered the rate, citing a combination of lower inflation and robust economic growth during the second quarter. Governor Malhotra noted that the Indian economy had witnessed rapid disinflation, with inflation dipping below the lower tolerance band for the first time since the RBI was tasked with inflation targeting. This decline has given policymakers more room to support growth while keeping prices under control.
Analysts say the repo rate cut is expected to improve liquidity in the real estate sector, potentially reducing borrowing costs for developers and homebuyers alike. However, investors appear cautious, with profit booking taking precedence in the immediate term. The recent rally in real estate shares ahead of the monetary policy meeting likely amplified the correction once the policy decision was announced.
Despite Monday’s sell-off, the rate cut could benefit the sector over the medium term. Lower interest rates can reduce home loan costs, stimulate housing demand, and support ongoing and new real estate projects. NIFTY Realty, which represents some of the largest listed developers in the country, is seen as a key beneficiary of sustained monetary easing, though short-term volatility is expected as the market adjusts to the latest policy signals.
As of 3:01 pm on Monday, the NIFTY Realty index was trading 3.54% lower, making it the top sectoral loser on the National Stock Exchange. Investors are now closely watching how developers and homebuyers respond to the rate cut, as well as broader macroeconomic indicators, including inflation trends and credit growth, which will guide the sector’s performance in the coming months.
While the immediate market reaction reflected cautious profit-taking, the RBI’s move underscores its commitment to supporting growth in a low-inflation environment, which could provide a long-term boost for the real estate sector.
