Real estate shares rally after RBI relief on loan downgrades

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NEW DELHI: Shares of realty companies jumped in Thursday’s trade after the Reserve Bank of India said there will be no downgrade of commercial realty loans if delays are genuine.

The central bank said revised draft norms for housing finance companies (HFC) regulation will be out by February 29.

“This is a big move and will bring the much-needed relief to the cash-starved real estate sector – and to both developers and the HFCs from the liquidity perspective. It will help ease out the time for maintaining and managing cash flows for cash-strapped developers and help them to completing several stuck projects,” said Anuj Puri, Chairman, ANAROCK Property Consultants.

“There is a big booster for the real estate sector in terms of extension of date of commencement of commercial operations of project loans for commercial real estate, delayed for reasons beyond the control of promoters, by another one year without downgrading the asset classification. So we can say that this monetary policy is an extension of the budget to boost economic growth,” said Amit Gupta, Co-Founder & CEO, TradingBells.

He said NBFC stocks like HDFC, M&M finance, L&T finance, Shriram Transport Finance, Bajaj Finance, PEL and LIC Housing finance are the major beneficiaries for the move taken by the RBI.

Shares of Brigade Enterprises (up 3.19 per cent), SOBHA (up 1.54 per cent), Godrej Properties (up 1.22 per cent), Oberoi Realty (up 1.18 per cent), Phoenix Mills (up 0.82 per cent), Prestige Estates Projects (up 0.49 per cent) and Sunteck Realty (up 0.24 per cent) were among the top gainers in the Nifty Realty index.

While DLF (down 1.22 per cent), Indiabulls Real Estate (down 0.44 per cent) and Mahindra Lifespace Developers (down 0.11 per cent) were the top losers.

The Nifty Realty index was trading 0.29 per cent up at 327.35 around 12:09 pm.

Benchmark NSE Nifty50 index was up 46.65 points at 12,135.8, while the BSE Sensex was up 144.99 points at 41,287.65.

Among the 50 stocks in the Nifty index, 37 were trading in the green, while 13 were in the red.

Shares of YES Bank, Vodafone Idea, Tata Motors, Indiabulls Housing Finance, Zee Entertainment, SBI, JSPL, ITC, DLF and SAIL were among the most traded shares on the NSE.