Nifty Realty Decadal Breakout

What is Nifty Realty?

The Nifty Realty is a 10-stock index that shows how well real estate companies are doing. These are the companies engaged in the construction of residential and commercial properties.

What is a breakout?

A breakout happens when the price of an asset moves above the resistance area or goes down below the support area. It’s like breaking through a barrier. When this happens, the price might keep going in that direction.

What happened last week?

The Nifty Realty Index has been breaking key resistance levels in its dream run.

Resistance levels are broken:
530 – Oct’10
550 – Oct’21
630 – Oct’09

Why is decadal breakout a big deal?

A decadal breakout here is a big deal because it means that an asset’s price has moved past a resistance level which was held for over a decade, where a lot of people were selling to keep stock prices and hence index level down.

Now when the breakout happens, it signals that everyone who wanted to sell has perhaps already done so, and now new investors are getting in after a long time adding massive volumes.

These new investors plan to keep the asset in hopes that its price will go up, creating a strong push or momentum in the asset’s value.

What’s causing this breakout in the realty sector?

A brief analysis of the sector points to the following observations:

Long Term Trends –

  • Pradhan Mantri Awaas Yojna: Making “Housing for all” a reality
  • RERA Act: Making real estate projects more transparent and protecting buyers’ rights
  • Affordable Interest Rates: Making home loans more accessible

But why did it all happen now? Because of the following immediate developments.

Short Term Trends –

  • High demand for luxury: Large players receive record interest due to luxury spending, especially in NCR.
  • Revaluation of land parcels: Land values are going way up in smaller cities (Tier 2 & 3) near highways, airports, and expressways. Companies holding inventory stand to benefit.
  • Anticipation of fall in interest rates soon

What can investors expect?

The real estate market is doing well, but be careful when choosing specific stocks. You do not want to repeat the 2008 housing crash-like scenario affecting your portfolios.

Instead of randomly picking, it’s smarter to choose a bunch of them. This way, you ride the positive trend but also avoid the risk of having too much of your money in one place.

Infra & Realty Gem WealthBasket is one such option carefully curated using our quant-based strategy which gives you exposure to realty, infrastructure, and their ancillary industries!