Realty stocks gained, pushing the Nifty realty index up 1.5 percent, on February 10 after the Reserve Bank of India left key rates unchanged, a clear indication that home loans won’t get expensive in a positive sign for homebuyers and the real estate sector.
Macrotech Developers, Indiabulls Real Estate, and Godrej Properties rallied more than 2 percent each. Brigade Enterprises, Sobha, Sunteck Realty, and DLF gained 1-1.75 percent.
"This is a piece of positive news for the real-estate companies as there will not going to be any hike in home loan rates. Currently, home loan rates are between 6.5 percent and 7 percent, this is one of the lowest home loan rates in history," said Yash Gupta-Equity Research Analyst at Angel One.
The low-interest-rate environment has been one of the supporting factors for the real estate segment. The Nifty realty index has gained nearly 200 percent in the last 20 months.
The RBI’s monetary policy committee retained repo rate, or the lending rate, at 4 percent and reverse repo rate, the borrowing rate, at 3.35 percent against Street expectations of a hike in reverse repo rate.
"We continue with buy call on Sobha and Oberoi Realty with a target price of Rs 1,060 and Rs 1,250 respectively," Gupta added.
Parth Nyati, Founder of Tradingo, also said rate-sensitive sectors such as infra, real estate, auto, and financial may continue to outperform.
Also read: RBI Monetary Policy: Key takeaways from the announcements
Contrary to many central banks, the RBI had chosen to be dovish. Generally, it is considered positive for the market but it would be important to see how the market would read it “because there could be a risk that RBI will remain behind the curve that may cause inflation in the future however the overall structure looks bullish for Indian market after a recent correction," he said. Catch all lives updates of RBI Monetary Policy here
The RBI seems less worried about elevated inflation, saying the headline inflation would peak in the current quarter of FY22 and would moderate in the first half of FY23.
The central bank maintained CPI inflation forecast of 5.3 percent for FY22 and expects FY23 CPI inflation at 4.5 percent.
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