Realty shares firm up after rate cut

Twelve realty stocks rose 0.18% to 3.33% at 15:30 IST on BSE after the Reserve Bank of India reduced the key policy repo rate by 25 basis points to 6.25% after the conclusion of the latest monetary policy meeting.

Oberoi Realty (up 3.33%), Sunteck Realty (up 1.53%), Anant Raj (up 1.32%), Peninsula Land (up 1.27%), D B Realty (up 1.20%), Unitech (up 1%), DLF (up 0.52%), Mahindra Lifespace Developers (up 0.44%), Godrej Properties (up 0.41%), Sobha (up 0.37%), Omaxe (up 0.29%) and Housing Development and Infrastructure (HDIL) (up 0.18%), edged higher. Prestige Estates Projects (down 0.44%), Parsvnath Developers (down 0.86%), Indiabulls Real Estate (down 0.96%) and Phoenix Mills (down 0.96%), edged lower.

 

The S&P BSE Realty index was up 1.06% at 1,574.20. It outperformed the Sensex, which was up 116.43 points or 0.41% at 28,359.72.

The S&P BSE Realty index had outperformed the market over the past 30 days till 3 October 2016, rising 2.10% compared with 1.01% decline in the Sensex. The index had, however, underperformed the market in past one quarter, falling 0.56% as against Sensex's 3.96% rise.

Purchases of both residential and commercial property are largely driven by finance.

The Reserve Bank of India (RBI) after the conclusion of its monetary policy meeting today, 4 October 2016, announced reduction in the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points (bps) to 6.25% from earlier 6.5% with immediate effect. Consequently, the reverse repo rate under the LAF stands adjusted to 5.75% and the marginal standing facility (MSF) rate and the bank rate to 6.75%.

The decision of the Monetary Policy Committee (MPC) is consistent with an accomodative stance of monetary policy in consonance with the objective of achieving consumer price index (CPI) inflation at 5% by Q4 March 2017 and the medium-term target of 4% within a band of plus or minus 2%, while supporting growth. All the six members voted in favour of MPC decision.

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