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Sharvari Patwa
Tania Jaleel

Mumbai, Sept. 20 The realty index continued its upward rally for the second consecutive day, surpassing Wednesday’s all-time high of 8464.54 by 6.85 per cent.

The US Federal Reserve’s 50 basis point cut in interest rate has given the indication that outlook is positive in case of foreign inflows.

“The rise in the BSE Sensex signals that our markets definitely look more attractive and lot of inflows are expected in the future,” said Mr Lalit Thakkar, Director-Research, Angel Broking Ltd. Realty major DLF registered a new all-time high of Rs 749.85, after Wednesday’s high of Rs 713.25, a rise of 5.13 per cent, while Unitech Ltd gained 12.43 per cent and Indiabulls was up by 9.42 per cent.

After the Fed rate cut there is an expectation that the RBI will also cut interest rates, which will be a boost for the residential housing sector as their EMI will come down, said an analyst from Religare Securites Ltd. Analysts feel that the Fed rate cut is signalling an interest rate cut by RBI, thereby decreasing the cost of credit, and in turn raising the demand for loans, especially in the residential sector which has been under a slump for long.

“Realty is among those sectors which are interest rate sensitive. An interest rate coming down means that the cost of home loans come down, leading to an increase in the purchasing power, thus boosting the demand for real estate,” said Mr Shailesh Kanani, analyst, Angel Broking Ltd.

Strong GDP and the booming economy signal that infrastructure building will be top priority for now, boosting the growth prospects of real estate developers, feels an analyst from a Mumbai-based brokerage firm.

Also, the SEZ are getting approvals, increasing the valuations of realty companies and in the future there will be a lot of activity in the realty sector, he added.

“When the markets got corrected these stocks were badly hammered and now with the markets going up the 16,000 mark they have bounced back with vigour,” said Ms Anita Gandhi, Head of Institutional Business, Arihant Capital Markets Ltd.

“This interest-rate sensitive sector had not really participated in the rally earlier but now they are catching up. Also, this sector has become one of the largest money chasing sectors as a lot of money was being raised recently,” said Ms Shahina Mukadam, Head-Research, IDBI Capital Market Services Ltd.

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