In a rare instance when a high beta sectoral index moves in opposite direction of the benchmark, the realty index on Thursday rallied as much as the fall in the NSE Nifty. Thanks to the Mumbai civic body’s draft plan to increase the Floor Space Index (FSI) the NSE Nifty Realty index gained 1.7% to close the session at 172.80 points. The Nifty index meanwhile closed in red having lost 132.65 points or 1.7% to 7847.25.
Investors seem to have considered the news report as a boon for the realty sector which in general is facing hurdles like high inventory and elevated leverage. The buying interest in stocks indicates hopes that higher FSI will allow builders to construct more offices and apartments, which will boost sales and drive profitability.
Though the increase in share prices witnessed across the sector, investors largely inclined towards companies which have greater presence in Mumbai. Stocks of most such companies rallied anywhere between 4 and 14% during the day trade on Thursday. For instance, Mumbai based developer DB realty gained the most in intra-day with 13.8%. However the stock pared some gain and ended the session at Rs50.10 on NSE, up 7.2%.
Shares of Indiabulls Real Estate rallied 11.7% to Rs 63.50, followed by Orbit Corporation which gained 4.70% and Housing Development & Infrastructure – up 3.8%. India bulls Real Estate and DB Realty witnessed higher trades.