Real estate stocks surge on new FDI rules

Written by fe Bureau | Mumbai | Updated: Oct 31 2014, 07:04am hrs
Relaxation in foreign direct investment (FDI) rules in the construction sector, including housing, prompted investors to buy real estate stocks on Thursday. Largest real estate company by market capitalisation, DLF rallied 7.5% in the day-trade before closing with 5% gains at Rs 123.90.

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The shares of Sobha Developers ended little changed at Rs 434.45 on BSE, after rising 9% intraday. HDIL and DB Realty touched intraday highs of 6.5% and 3.8%, respectively. Realty index closed at 1,530.56 points, up 3.4% over the previous day close, the best among BSE sectoral indices. The Sensex touched an all-time high of 27,346.33, up 0.92%, over the previous close.

Among other constituents of the Realty index, Unitech stocks climbed 9.6% and Indiabulls Real Estate gained 4.5% in the intra-day trade. The Union Cabinet on Wednesday eased the minimum project-size for inviting overseas investors to 20,000 square meter from 50,000 square meter mandated earlier. It had approved 100% FDI under the automatic route and also halved the paid-up capital requirement for projects to $5 million.

Realty stocks have seen buying interest in the last two sessions in anticipation of policy reforms. Unitech and DLF gained in the range of 11-12% in the last two days.

In fact, Unitech shares have given 26.14% returns so far this calendar. Mumbai-based Phoenix Mills generated highest return of 69% among realty stocks, followed by HDIL (52%) and Godrej Properties (46%) on reforms measures.