Beaten down realty stocks surge on rate cut hopes

MUMBAI: The BSE Realty Index was the top performing sectoral index in trade on Wednesday as heaving buying activity was seen in index heavyweights like DLF and other counters like HDIL, Anant Raj Industries, Sobha Developers, and Oberoi Realty.

According to analysts, the build-up in these counters are on hopes of a rate cut by the Reserve Bank of India (RBI) at its policy meet later this month.

“Realty and infrastructure stocks are seeing some momentum on hopes of a rate cut by the Reserve Bank of India in its meet on March 19 and hopes of global banks continuing with stimulus plans,” said A.K Prabhakar, Senior Vice President - Equity Research at Anand Rathi.

CLSA expects the RBI to respond to the recent Union Budget with a cut in the repo rate this month. According to the brokerage, risks to the official deficit forecast will likely make it more cautious in its response function.

At 01:30 pm, DLF was up 4.12 per cent, Anantraj Industries gained 6.86 per cent, Indiabulls Real Estate gained 7.21 per cent and Sobha Developers was up 9.97 per cent.

However, an analyst tracking the sector said that nothing has fundamentally changed in the sector to warrant such a sharp rise in stock prices. The expectations of the RBI cutting rates have been around for some time. The price movement in stocks seems to be a technical bounce back and speculating buying by traders after the recent hammering the stocks witnessed in the recent correction.