The Nifty Realty index came under heavy selling pressure on September 11, falling 4.36 percent to 834 by 9:56 am and touching its lowest level in more than two months amid a broad-based selloff across Indian equities.

Godrej Properties led the decline among major real estate stocks, falling 6.2 percent, while Lodha Developers and Prestige Estates dropped 6 percent and 4.6 percent, respectively. Oberoi Realty and DLF also remained under pressure, declining 4.24 percent and 3.83 percent.

The weakness in real estate stocks came against a deteriorating global risk environment as renewed inflation concerns in the US increased expectations of tighter monetary policy. US producer price inflation data released on Thursday showed renewed price pressures, partly driven by higher energy costs, strengthening concerns that the Federal Reserve could raise interest rates at its upcoming meeting.

Global bond markets also remained under pressure after the US Treasury bought back fewer securities than investors had anticipated. The development pushed the 10 year US Treasury yield close to the 5 percent mark, further tightening global financial conditions and weighing on risk assets.

Rising crude oil prices have added to inflationary pressures, driving global bond yields higher and reducing investor appetite for equities. The rate sensitive nature of the real estate sector makes property stocks particularly vulnerable to higher borrowing costs and tighter financial conditions.

The broader market also reflected the shift in global risk sentiment, with the Nifty Metal index falling 2.7 percent in early trade.

Financial markets are increasingly pricing in the possibility of monetary tightening. Devarsh Vakil, head of prime research at HDFC Securities, said federal funds futures were indicating a more than 70 percent probability of a rate hike at the Federal Reserve meeting next week.

Indian government bonds also weakened sharply in opening trade, with the benchmark 10 year government bond yield moving above 7 percent to its highest level in more than three months. Rising crude oil prices and elevated US Treasury yields have added to pressure on Indian debt markets and weighed on overall investor sentiment.

Investors are now awaiting US consumer price inflation data for further clues on the Federal Reserve's policy trajectory. A stronger than expected inflation reading could reinforce expectations of additional rate increases, potentially pushing US Treasury yields and the dollar higher while increasing pressure on other asset classes.