Real estate stocks were the biggest gainers from Wednesday’s RBI policy decisions relating to the sector, while banking & financial stocks witnessed some selling pressure as the central bank raised interest rates in the economy. At close of trade, the sensex was down 215 points, or 0.4%, at 54,892 with Reliance Industries, Bharti Airtel and ITC contributing the most to the loss.
After its policy meeting, the RBI doubled the limit on housing loans given by co-operative banks. It also allowed rural co-operative banks to finance residential real estate projects, which is seen to be supportive of affordable housing and inclusive growth, said a note by Experian India MD Neeraj Dhawan. As a result, leading real estate stocks rallied up to 5% with BSE’s realty index closing nearly 2% up. Macrotech Developers (Lodha) closed 5% up, while Sobha Developers gained 3.1% and DLF 2.4%.
Some real estate players, however, said that the central bank’s decision to hike repo rate (at which banks borrow from the RBI) may act as a damper for the sector since the central bank’s decision would almost certainly raise home loan EMIs, leading to a re-think on buying decisions by prospective homeowners. During the day, banking, financial services & insurance (BFSI) stocks remained under selling pressure after the rate hike decision as higher rates may lead to some drop in lending business, and hence lower income for these entities.
Among sensex stocks, while Axis Bank, IndusInd Bank and ICICI Bank were among the laggards, SBI and Bajaj Finance closed with gains. The day’s overall selling in the market was led by foreign funds with data on the BSE showing a net outflow of nearly Rs. 2,500 crore.
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