Kolkata: Realty stocks got a boost with the State Bank of India announcing a cut in its rates by 50 to 100 basis points for new loan seekers from the period between now and the year-end.
Borrowers with salary account with the bank would get an additional discount on the lower rate. A floating rate cut of 50 basis points by ICICI Bank also gave the additional fillip for the sentiment.
According to Ankur Srivastava, Managing Director, DTZ, a global property consultancy firm, real estate sale picks up during this time of the year, which also marks the festive season. Developers are able to realise better revenues. This move by SBI would bring about positive sentiment about rate-sensitive segment - low and middle income group urban housing - of the real estate sector. This trend of lowering rates is likely to be picked up by others in the banking sector and housing finance companies, industry analysts felt.
The growth of housing loan of smaller denominations slowed in the second quarter of the current financial year, according to bankers.
The prime property market had not been affected by relatively higher rates as its economics run on investment and speculative factors more than the shelter needs, analysts said. Shailesh Kanani, an analyst with Angel Broking, said that SBI’s announcement was a positive development. According to Gul Teckchandani, an independent market analyst, there are quite a few manufacturing companies with strong embedded real-estate play.
BSE Realty Index today moved up 2.71 per cent, while the Sensex shot up by 0.84 per cent. In the past one month, the index gained by over 35.61 per cent and in the year-to-date it has returned 88.67 per cent. Among the 14 stocks in the index, only one - Anant Raj Industries, declined. DLF, which is also in the Sensex basket now, improved by 2.92 per cent. Akruti Nirman posted highest gain of 17.97 per cent, followed by Phoenix Mills (9.4 per cent).
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