Mumbai: Shares of India’s two biggest developers, DLF Ltd and Unitech Ltd, fell on Tuesday after Credit Suisse Group cut its ratings for the stocks on concern new projects may be delayed as demand wanes and funding costs rise.

DLF dropped 6.33% to close at Rs426.95, while Gurgaon-based Unitech declined 6.17% to Rs153.55 as the benchmark index, the Sensex, slipped 4.9%.

DLF was cut to “underperform” from “neutral”, analysts Anand Agarwal and Musaed Noorani wrote in a note to clients. Unitech was downgraded to “neutral”.

Accelerating inflation and borrowing costs that have climbed to the highest in six-and-a-half years are deterring homebuyers, while companies are delaying real estate investments due to faltering economic growth, the analysts said. The developers may also defer new projects in the next fiscal year as the drop in Indian equities and high debt costs crimp fund raising, they said.

The Bombay Stock Exchange Realty Index has declined 63% this year, compared with a 36% drop in the benchmark Sensex. The short-term outlook for the sector is negative, Fitch Ratings said last week.

New Delhi-based DLF’s planned $255 million (Rs1,102 crore) share buy-back is “ill advised” and the funds would be better used for new projects, the Credit Suisse analysts said. Its stock price target was cut 48% to Rs342.