The shares of real estate stocks have seen a sharp surge recently, pushing the Nifty Realty index around 8% higher in two days to cross 800 for the first time this month so far on Monday, with analysts highlighting attractive valuations after a prolonged correction.Heavyweight DLF and Godrej Properties shares surged more than 9% in two days, while those of Oberoi Realty jumped 6%. Prestige Estates shares rallied over 11% during the period, while those of Brigade Enterprises, Aditya Birla Real Estate, Phoenix Mills, Anant Raj and Lodha Developers gained 5-7%. Notably, these stocks have declined up to 50% in one year.Attractive valuations in realty stocks?The rebound in realty stocks is driven by stable operational performance in Q4 FY26 along with positive pre-sales guidance, said Uttam Kumar Srimal, Senior Research Analyst at Axis Direct. “These factors combined with continued strength in residential sales across key markets lends optimism to the sector outlook. Most companies across our coverage universe continue to maintain healthy balance sheets with net debt-to-equity ratios largely in control and below threshold,” he said.After a prolonged correction, valuations in certain real estate counters have turned attractive, prompting investors to re-enter the sector, the analyst explained, adding that the residential real estate cycle remains favourable, supported by rising urbanization, premium housing demand, and sustained infrastructure spending. As a result, the Nifty Realty index is outperforming broader markets after a period of underperformance, according to him.Has the real estate sector become cheap?Harshal Dasani, Business Head at INVasset PMS, however differed in opinion. According to him, real estate stocks are rallying because the market is repricing the rate cycle, not because the sector has suddenly become cheap. After a sharp downtrend, the bounce reflects easing crude concerns, softer bond yield expectations and a belief that inflation pressure may not force policy to stay restrictive for too long, he said, adding that for real estate, that mechanism matters directly.Lower rate expectations support affordability, improve funding conditions and help developers maintain launch momentum. According to the analyst, the immediate trigger is sentiment, but the underlying driver is the expectation of better cash-flow visibility.Also read: Flexi cap fund inflows halve to Rs 5,175 crore in May after record April. Is this profit booking or a buying opportunity?Which real estate stocks should you buy?Dasani explained that a blanket buy call across realty would be misplaced. The better risk-reward is in developers with strong balance sheets, visible launches, high pre-sales conversion and limited dependence on expensive debt. Listed developers have gained share in this cycle, but valuations in parts of the sector already leave little margin for execution misses, he further said, adding that this is a quality-led trade, not a beta trade. “The stock to consider is not the one that has fallen the most, but the one that can sell inventory, collect cash and launch projects without stretching the balance sheet,” he added.Prestige Estates, Oberoi Realty and Arvind Smartspaces were the top picks of Uttam Kumar Srimal from Axis Direct. From a technical standpoint, Sudeep Shah, Head- Technical and Derivatives Research at SBI Securities said that Prestige Estates, Phoenix Mills and DLF are exhibiting positive price structures.Also read:JAL shares to delist from BSE and NSE on Thursday. What happens to its 6 lakh shareholders?Technical view on Nifty RealtyNifty Realty has given a downward-sloping trendline breakout on the daily chart, signalling a potential trend reversal, said Shah from SBI Securities. The index has also reclaimed its 100-day EMA for the first time since May 8, reflecting improving market sentiment, he added.“A strong rebound from the key support zone of 739–735 further reinforces the bullish outlook. Momentum indicators are supportive, with the RSI trending higher and the DI+ crossing above DI- on the ADX indicator, indicating increasing buyer dominance. As long as the index sustains above the 739–735 support zone, the ongoing up move is likely to continue,” according to the analyst.Also read: 54% of top Indian stocks are cheaper now than in 2023. Is it time to buy?(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)