The Nifty Realty index has fallen around 22% so far in 2026, dropping to a 52-week low of 661 earlier this week on Monday. Notably, real estate stocks experienced sharp volatility in 2025 as well, leading analysts to question their valuations.
This year, the sharp decline in real estate stocks began after announcements around new artificial intelligence tools sparked concerns about possible disruption in India’s much-touted IT services sector. This triggered investor worries about potential IT layoffs, which could significantly impact real estate demand in key markets such as Bengaluru. These concerns weighed on real estate stocks for most of February.
Later in March, the war between Iran and the US-Israel alliance sparked a sharp rally in oil prices, which in turn rattled global stock markets. Dalal Street was no exception. After US and Israel’s military strikes killed Iran’s former supreme leader Ayatollah Ali Khamenei, Tehran retaliated by attacking several regions across the oil-rich Middle East and effectively disrupting traffic through the Strait of Hormuz.
The bloodbath on Dalal Street wiped off a significant portion of investors’ wealth in March. Realty stocks were also part of the selloff. Lodha Developers, Anant Raj, Godrej Properties and other real estate stocks have declined up to 28% in just one month. Realty shares have, however, recovered some losses over the past two sessions, tracking the mild recovery in Indian stock markets after the massive crash amid rising hopes for a ceasefire.
As markets approach the end of the ongoing financial year and the start of April, investors are eyeing the RBI’s first Monetary Policy Committee (MPC) meeting of the new financial year, scheduled for April 6–8. Rate-cut decisions typically have a strong impact on the real estate sector.
What should investors do?
Investors can selectively accumulate quality large real estate players in their portfolios, as they have better capabilities to absorb any slowdown in a few micro-markets and can manage growth by expanding into new geographies or higher-ASP markets, said Sunny Agrawal, Head – Fundamental Research at SBI Securities.
“Players with a balanced portfolio and fixed annuity income are better shielded from earnings shocks. Investors can accumulate fundamentally strong businesses such as Oberoi Realty, Aditya Birla Real Estate, Prestige Estates, Lodha, Phoenix Mills, Sunteck Realty and Raymond Realty. Housing finance can also be a good segment to ride the real estate cycle, and stocks like Home First and India Shelter can be considered,” the analyst said.
“From the building materials segment, one can also look at companies such as Kajaria Ceramics (better shielded from gas supply shocks), UltraTech Cement, JK Lakshmi Cement, Star Cement and Cera Sanitaryware,” he added.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own and do not represent the views of The Economic Times.)