Nifty Realty Index Bounces Back: Old and New LTCG Regimes on the Card for Real Estate?
Nifty Realty Index Rebounds After Correction
The Nifty Realty Index, a key indicator for India’s real estate sector, experienced a sharp correction after reaching a peak in mid-June, dropping by 15%. However, the index recently rebounded with a 2% gain, breaking a four-day losing streak. Despite near-term weakness indicated by its position below the 20-DMA and 50-DMA, the index remains above its long-term moving average, suggesting long-term strength in the sector.
Government Relief Measures in Focus
The index’s recovery is partly driven by speculation around potential government relief measures for the real estate sector. Following recent budget announcements, the government is reportedly considering initiatives like a grandfathering clause, which would allow transactions completed before July 2024 to retain current indexation benefits. Additionally, there is talk of giving taxpayers the choice between the old and new Long-Term Capital Gains (LTCG) regimes for real estate transactions. These proposed measures are seen as crucial for boosting the sector’s performance and investor confidence.
In her budget speech, Finance Minister Nirmala Sitharaman proposed changes to real estate taxation, including removing indexation benefits and lowering the LTCG rate from 20% to 12.5%. These adjustments are aimed at simplifying the tax structure and making real estate investments more attractive. Market sentiment has improved in anticipation of these potential changes, reflecting optimism within the sector.
Stock Performance and Market Gains
Amid market volatility, certain stocks within the Nifty Realty Index have outperformed. Brigade Enterprises led the gains with an 8% increase, despite reporting a weaker operational performance in the quarter. Other notable performers include Prestige Estates and Godrej Properties, both of which saw gains of nearly 5%. These stock performances highlight growing investor optimism, fuelled by expectations of government support and a positive outlook for the real estate sector.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.