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Informist, Monday, Dec. 16, 2024

By Apoorva Choubey

MUMBAI – Real-estate companies saw the addition of long bets and closure of short positions in their futures, as growth in these businesses is expected to improve over the next few months on the back of a likely recovery in demand, higher traction for high-end properties, favourable regulatory reforms, and increased developer consolidation, according to experts. The Nifty Realty was the best sectoral gainer on the NSE today, with a 3% rise.

Open interest in the December futures of Macrotech Developers jumped 14.5% to 1.7 million, while that in Oberoi Realty and Prestige Estates Projects rose 1.3% to 6.8 million and 15% to 1.5 million, respectively. Total open positions in DLF's current month futures fell 0.4% to 40.8 million and those in Godrej Properties declined 1.5% to 5.7 million. These shares ended 1.5-6.4% higher in the cash market, buoyed by new property launches and optimism surrounding strong housing demand in 2025, analysts said.

Brokerage UBS reportedly anticipates the sector's growth momentum to improve, supported by record-high affordability, favourable regulatory reforms, and stabilising interest rates. Aside from this, favourable demographic trends, including increasing urbanisation, higher disposable incomes, and a shift towards nuclear family structures, are likely to sustain demand for residential properties, UBS recently said, according to reports.

Other brokerage houses such as HSBC Global Research are also positive on the real-estate sector. HSBC Global expects major launches in the Indian residential market in Jan-Mar to help developers meet their pre-sales guidance for the financial year 2024-25 (Apr-Mar). The research firm expects residential demand to grow in 2025, but at a lower pace due to a high base, it said in a report last week. 

The weak pre-sales in the first half of FY25 were driven by fewer launches because of approval-related issues due to the general election. Launches in this period were only 28% of the launch guidance for FY25. HSBC Global Research expects the issues to get resolved in Jan-Mar and launches to pick up. HSBC Global has retained its "buy" rating on Godrej Properties and DLF, and "hold" rating on Oberoi Realty.

In line with the bullish view, traders bought call options of most of these real-estate companies, across expiries, as they expect gains to be sustained. Their put options were sold, also reflecting the long view. Volumes were the highest in DLF, Oberoi Realty, and Macrotech Developers.

Meanwhile, call writers remained active in the Nifty 50's monthly and weekly options, as Indian equities are not expected to gain in the next couple of sessions, given the caution seen across global markets ahead of the US Federal Reserve's policy review. The US central bank will detail the outcome of its two-day meeting late Wednesday.

Traders wrote call options of the Nifty 50 across strikes but out-of-the-money strike prices were sold even more aggressively, indicating that gains, if any, are seen to be limited. The 24700, 24800, and 25000 strike price call options were the most actively written among call options, and hold sizeable open interest. Thus, these levels could act as key levels for the index.

Among put options, out-of-the-money strikes were bought actively. The 24000 strike price saw the maximum volumes, followed by 24500 and 24600. 

"Although a rate cut is on the cards, there is lack of confidence amongst the investors due to the sluggish Chinese economy and concerns ahead of (US President-elect Donald) Trump's decision on import tariffs on key economies," said Prashanth Tapse, senior vice-president of research at Mehta Equities. Investors also await the US manufacturing and services purchasing managers' indices to be released later in the day, followed by US retail sales data Tuesday.

The index closed at 24668.25, down 100.05 points or 0.4%. Open interest in the December futures of the Nifty 50 rose 0.2% to 10.88 million. 

In another bearish indication, the Long-Short ratio of foreign institutional investors in index futures decreased to 0.70 last week from 0.80 due to a reduction in long positions, Axis Securities said in a report. As on Friday, FIIs were net short on index futures to the tune of $491 million, according to a report by Nuvama Institutional Equities.

As long as the Nifty 50 holds above the 100-day exponential moving average support, which is near 24360 points, traders are advised to adopt a buy-on-dips strategy, said Hrishikesh Yedve, assistant vice-president, technical and derivatives research, Asit C. Mehta Investment Interrmediates. The index will face resistance at 24860, and then 25000 points, in the short term, he said.

--Nifty 50 Dec closed at 24720.15, down 110.60 points; 51.9-point premium to spot index

--Nifty 50 Jan closed at 24910.00, down 96.70 points; 241.75-point premium to spot index

--Nifty 50 Feb closed at 25065.00, down 70.30 points; 396.75-point premium to spot index

Dixon Technologies India, Reliance Industries, HDFC Bank, ICICI Bank, Oberoi Realty, Bajaj Finance, Bharti Airtel, Axis Bank, Vedanta, State Bank of India, Tata Consultancy Services, DLF, Infosys, and Kotak Mahindra Bank were the most actively traded contracts.  End

Edited by Rajeev Pai

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