Real estate stocks gain as Cabinet set clear pay panel award

NEW DELHI: Real estate stocks surged in Wednesday's trade on hopes of a demand boost from the seventh Pay Commission award, which is expected to be cleared by the Union Cabinet later in the day.

The committee of secretaries tasked with reviewing the recommendations has given its report and the total outgo if the award, to be implemented from January 1, 2016, is pegged at Rs 1.02 lakh crore, which can work like a stimulus package for the economy, boosting consumer demand.

Reports of good progress of monsoon, which has already covered half of the country with normal rainfall, also raised hope of a drop in inflation, which can lead the central bank to cut interest rates further. Realty demand tends to rise in a low interest rate environment.

The sentiment were also perked up due to new draft rules unveiled by the government that showed developers may have to pay 11.2 per cent interest to buyers for delay in handing over apartments and homes.

Shares of Unitech closed 7.38 per cent higher, that of HDIL 3.01 per cent, Sobha Developers 3.17 per cent and Oberoi Realty 1.03 per cent.

Industry leader DLF closed 7.86 per cent after reports that promoters KP Singh and family have decided to make the real estate company debt free by purchasing shares through a Rs 10,000 crore preferential issue.

All the constituents of the BSE Realty index were trading in the green, with the index itself surging 4.30 per cent.