RBI monetary policy effect: Nifty Realty Index rises 1.55%. Shares of Sobha, Oberoi Realty hit record high

RBI monetary policy effect: Realty stocks witnessed strong buying on Friday as the Reserve Bank of India (RBI) kept the repo rate and liquidity stance unchanged during the June 2024 monetary policy review. The repo rate, which is the rate at which the RBI lends money to commercial banks, is a key determinant of interest rates in the economy. In the realty sector, changes in the repo rate can significantly impact borrowing costs and, consequently, demand for real estate. The Nifty Realty index surged over 1.55 percent, whereas Indian realty majors Oberoi Realty and Sobha hit a new peak. Shares of Suntech Realty shot up over 8 percent. According to stock market experts, the realty sector is a rate-sensitive segment, and RBI keeping the repo rate unchanged has boosted the morale of Dalal Street bulls regarding the rate-sensitive segment.

Trigger for realty stocks

Avinash Gorakshkar, Head of Research at Profitmart Securities, provided a comprehensive analysis of the surge in real estate shares, "All rate-sensitive segments, including IT, banking, and the realty segment, are witnessing increased buying interest due to the RBI's decision to maintain the repo rate in its monetary policy meeting. This move by the RBI has significantly boosted the confidence of short to medium-term investors as the cost of funding for real estate is expected to remain stable from a banking perspective."

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On the positive implications of RBI's monetary policy outcome for the realty sector, Saurabh Jain, Vice President — Research at SMC Global Securities, reassured, "The unchanged repo rate implies a stable business environment for rate-sensitive segments like realty. The market is anticipating the benefits the realty segment would soon reap from this RBI monetary policy outcome. Therefore, the market is expecting strong quarterly numbers from real estate companies as there would be no rise in their cost of funding."

RBI monetary policy effect

Applauding the RBI's decision, Anuj Puri, Chairman at ANAROCK Group, stated, "The RBI's strategic move to maintain the repo rate is a significant boost for the Indian real estate sector. This stability ensures that home loan interest rates remain low, a key factor in making housing more affordable for potential buyers. With unchanged borrowing costs, both developers and homebuyers can reap the benefits of increased market confidence and predictability, leading to a more robust and promising real estate market."

Mohit Goel, MD of Omaxe Group, said, "The realty sector is experiencing remarkable growth, with increased interest in mid, premium, and luxury housing segments. Stable loan rates will benefit prospective buyers and sustain public confidence in the authorities. We expect this positive step to keep the real estate sector on an upward trajectory."

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