Realty stocks see profit booking; Sobha slides up to 11%

Realty stocks in Monday’s trade (February 12) were in deep red as investors chose to book profits in the counters that have delivered exceptional returns in the past 12 months.

The Nifty Realty index, at the time of writing the copy, was down over 2 per cent at 856.70 levels, while at the day’s low, it hit levels of 850.15. The index logged a new all-time high of 894.40 on January 15, 2024.

All but 1 constituent of the Nifty Realty traded in the red with a cut of up to 5 per cent at around 2:13 pm, while at the day’s low, the cut was even sharper.

Sobha slid to the day’s low of Rs 1,258.35, logging a decline of over 11 per cent even as Motilal Oswal Financial retained its buy view on the counter with a target of Rs 1,700. The brokerage believes that as the company unlocks its vast land reserves and explores growth opportunities beyond its existing land bank, its growth visibility will improve considerably.

“The proposed fundraise, along with the expected improvement in profitability, will enable the company to deliver an all-round performance over the next few years, it added.

Nifty Realty, after a stellar run-up of 110 per cent, in the past one year is seeing some consolidation.

The relative strength index (RSI) of the index is 64.5. In an uptrend or bull market, the RSI tends to remain in the 40–90 range, with the 40–50 zone acting as support. During a downtrend or bear market, the RSI tends to stay between the 10 and 60 range, with the 50–60 zone acting as resistance.

The “Higher High, Higher Low” formation continues to boost the upward tilt of the real estate index. While the price action is perceiving selling pressure near the 900 level, the underlying bias stays highly resilient, as per the technical analysts. 

On the downside, the support of the 50-simple moving average (SMA) offers a key support mark placed at 809, Avdhut Bagkar, derivatives and technical analyst StoxBox noted.

"Until the index protects the 50-SMA support, the trend will perceive bullish efforts towards surpassing the hurdle of the 900 mark. The strength oscillator, Relative Strength Index, has cooled off past staying for an extended period in the overbought category, implying a reversal in trend. A breakout over 900 could see the index heading in the direction of the 950 level," Bagkar added.