Realty shares extend gains on RBI measures

Shares of 12 real estate companies rose by 0.06% to 8.52% at 15:07 IST on BSE, extending Tuesday's gains triggered by the Reserve Bank of India announcing measures to improve liquidity conditions in the banking system.

Anant Raj Industries (up 8.52%), Indiabulls Real Estate (up 8.07%), Unitech (up 7.16%), DLF (up 6.15%), HDIL (up 6.06%), Peninsula Land (up 5.40%), D B Realty (up 4.37%), Prestige Estates (up 2.74%), Oberoi Realty (up 0.75%), Parsvnath Developers (up 0.74%), Sobha Developers (up 0.33%) and Sunteck Realty (up 0.06%), edged higher.

The S&P BSE Realty index was up 4.29% at 1,315.63. It outperformed the S&P BSE Sensex, which was up 1.37% at 20,257.

The BSE Realty index had outperformed the market over the past one month till 8 October 2013, rising 4.16% compared with the Sensex's 3.70% rise. The index had, however, underperformed the market in past one quarter, falling 15.11% as against Sensex's 3.41% rise.

The Reserve Bank of India (RBI) on Monday, 7 October 2013, evening announced a reduction in the marginal standing facility (MSF) rate by 50 basis points to 9% with immediate effect. The central bank also decided to provide additional liquidity through term repos of 7-day and 14-day tenor for a notified amount equivalent to 0.25% of net demand and time liabilities (NDTL) of the banking system through variable rate auctions on every Friday beginning from 11 October 2013. The notified amount and tenor of the term repo auctions will be announced prior to the dates of the auctions, the RBI said in a statement.

The BSE Realty index rose 1.57% to 1261.54 on Tuesday, 8 October 2013. It has risen 5.93% in two sessions from 1242.01 on Monday, 7 October 2013. Real estate stocks rose on anticipation that improved liquidity conditions in the banking system may boost demand for residential and commercial property. Purchases of both residential and commercial property are largely driven by finance.

Starting with the Mid-Quarter Review of September 2013, the RBI began a calibrated withdrawal of exceptional measures undertaken since July 2013. This was done with a view to normalising liquidity conditions, the RBI said. RBI said that open market purchase operations of Rs 9974 crore were conducted on Monday, 7 October 2013, to inject liquidity into the banking system.

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