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Realty Shares Slide as Bond Yields Raise Rate Concerns
Real estate shares fell sharply on Friday.
The Nifty Realty index reached its lowest level in more than two months.
Shares of several major property companies also declined.
Analysts said investors were worried about rising interest rates.
Bond yields in the United States and India increased.
Higher rates can make it more expensive for developers to borrow money.
They can also make home loans costlier and reduce housing demand.
Some weaker-than-expected first-quarter results added to investors’ concerns.
The Nifty Realty index fell to a more-than-two-month low, with all constituents trading lower.
Godrej Properties, Lodha, DLF, Prestige Estates, Phoenix Mills, Anant Raj and Oberoi Realty declined.
Analysts linked the selloff to rising global bond yields and renewed interest-rate concerns.
US 10-year Treasury yields approached 5%, while Indian 10-year bond yields exceeded 7%.
Higher borrowing costs, weaker-than-expected first-quarter results and inflation concerns pressured the sector.
- Who
- Realty companies including Godrej Properties, Lodha, DLF, Prestige Estates Projects, Phoenix Mills, Anant Raj and Oberoi Realty; analysts Ravi Singh and Kranthi Bathini.
- What
- Realty shares fell as the Nifty Realty index reached a more-than-two-month low.
- Where
- The Indian stock market, with broader concerns linked to United States and Indian bond markets.
- When
- Friday.
- Why
- Rising bond yields, renewed interest-rate concerns, higher energy-related inflation pressures and weaker-than-expected first-quarter results weighed on the sector.
Key facts
- Index movement
- Nifty Realty touched a more-than-two-month low.
- Sector breadth
- All Nifty Realty constituents traded in the red.
- United States yield
- The US 10-year Treasury yield moved close to 5%.
- India yield
- The Indian benchmark 10-year bond yield crossed 7%, its highest level in more than three months.
- Main concern
- Higher borrowing costs could reduce housing demand and raise developers’ financing costs.
- Additional pressure
- Weaker-than-expected first-quarter results from some companies raised concerns about near-term earnings.
- Analysts quoted
- Ravi Singh of Master Capital Services and Kranthi Bathini of WealthMills Securities.
Quotes
Kranthi Bathini
Equity Strategist at WealthMills Securities
“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.”
businesstoday.in
“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.”
businesstoday.in
Sources
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