Lower borrowing costs, rising demand, and bullish technical patterns set the stage for a sectoral rally
The Indian real estate sector is experiencing a resurgence, buoyed by the Reserve Bank of India’s (RBI) recent monetary policy adjustments. On April 9, 2025, the RBI reduced the repo rate by 25 basis points to 6%, marking the second consecutive rate cut this year. This move, accompanied by a shift in the monetary policy stance from “neutral” to “accommodative,” aims to stimulate economic growth amidst global uncertainties, including heightened U.S. tariffs.
The real estate sector, being highly sensitive to interest rate fluctuations, has responded positively to this policy change. Lower borrowing costs enhance affordability for homebuyers and reduce financing expenses for developers, thereby invigorating market activity.
Performance of Key Real Estate Stocks
DLF Ltd
DLF, one of India’s leading real estate developers, witnessed a 33% decline in its stock price from January to March 2025. However, post the RBI’s rate cut, the stock has shown signs of recovery. Technical indicators suggest a potential reversal, with the stock breaking out from a classic falling channel pattern and sustaining above its 50-day simple moving average. An increase in trading volume further corroborates the bullish momentum.
Oberoi Realty
Oberoi Realty experienced a significant price drop from ₹2,345 to ₹1,450 after delivering a 195% return between April 2023 and December 2024. Despite this correction, the stock is exhibiting a bullish reversal pattern known as a double bottom and is trading above its 50-day moving average. The 14-period Relative Strength Index (RSI) indicates strengthening momentum, suggesting potential for upward movement.
Broader Market Implications
The RBI’s accommodative stance is expected to have a cascading effect on the real estate sector. Lower interest rates reduce the cost of capital, encouraging both developers and consumers to engage more actively in the market. This environment is conducive to increased housing demand, particularly in the mid-premium segment, and can aid in the clearance of unsold inventory.
Furthermore, the reduction in home loan interest rates by major banks, following the RBI’s policy change, is likely to enhance affordability for potential homebuyers. This development is anticipated to stimulate demand, especially among first-time buyers and those seeking affordable housing options.
Economic Outlook
The RBI’s decision to cut the repo rate aligns with its revised projections for the fiscal year 2025-26, which include a GDP growth forecast of 6.5% and a Consumer Price Index (CPI) inflation target of 4%. These adjustments reflect a balanced approach to fostering economic growth while maintaining price stability.
Analysts anticipate that the RBI may implement additional rate cuts in the coming months, depending on the evolving economic landscape. Such measures would further support the real estate sector by enhancing liquidity and reducing borrowing costs.
The RBI’s recent interest rate cut and accommodative policy stance have injected renewed vigor into the Indian real estate sector. Key players like DLF and Oberoi Realty are showing signs of recovery, supported by favorable technical indicators and improved market sentiment. As borrowing costs decline and affordability improves, the sector is poised for sustained growth, contingent upon the effective transmission of monetary policy measures and the broader economic environment.
