Realty, banking stocks surge as PSU banks agree to rate cut

MUMBAI: Banking and realty stocks surged in late trade Tuesday as public sector banks agreed to cut rates to boost flow of credit to the industry. BSE Realty Index climbed 13.44 per cent and Bankex jumped 7.07 per cent.

In a meeting with the finance minister, PSU banks reached a consensus to cut interest rates on advances by 75 basis points and on deposits by 50 bps.

"This (rate cut) will largely help real estate developers to resolve their credit problems. Also, the rate cut will not affect the PSU banks as the CRR, SLR and repo cut by RBI will compensate their losses," said Amrinder Khanna, economist at Spark Advisory.

Among realty stocks, India Bulls surged 13.31 per cent, Omaxe rose 10.47 per cent, Unitech spurted 15 per cent, Parsvanath climbed 9.06 per cent and DLF soared 9.07 per cent.

The top gainers from banking were Bank of Baroda (10.86%), Kotak Mahindra Bank (10.21%), Union Bank (9.92%), Bank of India (7.94%) and Oriental Bank (7.77%).