Realty stocks cheer as RBI allows bank money into REITs

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Published: April 6, 2017 6:41:01 PM

Realty stocks appreciated for the second consecutive day with the NSE Realty rising 0.91%, on the prospects massive fresh capital inflows into the sector reeling under a cash crunch following RBI’s decision to allow banks to invest in Real Estate Investment Trusts.

The major realty stocks comprising the index ended in green. Housing Development and Infrastructure Ltd rose 1.2% to close at Rs 84.25; DLF Ltd appreciated 4.61% to close at Rs 156.7.

Realty stocks appreciated for the second consecutive day with the NSE Realty rising 0.91%, on the prospects massive fresh capital inflows into the sector reeling under a cash crunch following RBI’s decision to allow banks to invest in Real Estate Investment Trusts.

The major realty stocks comprising the index ended in green. Housing Development and Infrastructure Ltd rose 1.2% to close at Rs 84.25; DLF Ltd appreciated 4.61% to close at Rs 156.7; Indiabulls Real Estate Ltd gained 0.61% to close at Rs 91.15; whereas Unitech Ltd. rose 3.42% to close at Rs 6.05. Godrej Properties made an all time high of Rs 453 before closing up 1.39% at Rs 442.25, The Phoenix Mills Ltd. gained 2.14% to close at Rs 400.25.

Delta Corp, which yesterday touched its all-time high of Rs 218.3, fell 7.88% today to close at Rs 185.8. Also, Sobha Ltd, which gained 16.2% yesterday and made a one-year high of Rs 411.8, fell 0.6% today to close at Rs 397.5. Prestige Estates Projects Ltd, which yesterday made a 52 weeks high of Rs 233.6, gained 1.58% today to close at Rs 228.

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RBI in its today’s policy meet kept the Repo rate unchanged at 6.25%, but increased the reverse Repo rate from 5.75% to 6%. In a major boost to the realty sector, the RBI allowed banks to invest into REITs (Real Estate Investment Trusts) and InvITs (Infrastructure investment Trusts), within the limit of 20% of their net owned funds. Previously Banks were not able to invest in REITs.

The move would result in increased availability of low-cost funds for the real estate industry, which is short on cash and capital due to demonetisation and dried up funding. It’s a win-win situation for both, the banking industry and the realty sector. The NSE realty index rose to its 52-week high of 230.2 points on the news.

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