Realty stocks gained after RBI in its first monetary policy of FY17-18 allowed banks to invest in Real Estate Investment Trusts or REITs and Infrastructure Investment Trusts or InvITs.
Expecting much needed relief to real estate and infrastructure companies, BSE Realty index gained 2 per cent on a day the Sensex and Nifty 50 closed marginally lower.
The big gainers among the real estate companies on BSE included DLF (4.48 per cent), Unitech (3.25 per cent), Prestige (1.92 per cent), Godrej (1.88 per cent), Oberoi Realty (1.79 per cent), HDIL (1.20 per cent), Ansal Housing & Construction (9.67 per cent), Peninsula Land (7.17 per cent), and D.B. Realty (1.78 per cent).
IRB Infrastructure Developers also gained 1.72 per cent on BSE.
Anshul Jain, managing director, Cushman & Wakefield India, an American commercial real estate services company said, “This is a positive move by the RBI that will allow greater institutional participation in the real estate sector. Banks will now have a route to investment into real estate, in turn helping the liquidity within the sector.”
Jain said that RBI and SEBI had shown faith in real estate investment foreseeing positive and secured return in mid to long term on account of steady economic growth. “This announcement can be viewed as a sign of maturity and a step towards institutionalisation of real estate in India,” Jain said.
Currently, banks are allowed to invest in equity-linked mutual funds, venture capital funds (VCFs) and equities to the extent of 20 per cent of their net owned fund (NOF). It is proposed to allow banks to invest in REITS and InvITs within this umbrella limit.
Kamlesh Shroff, spokesperson, BSE Brokers Forum said, “RBI’s decision to allow banks to invest in REITs and InvITs will bring sanctity to these instruments from a retail investor’s perspective and the latter will find the confidence to invest in such trust in sync with mutual funds as an investment class.”
“Banks participation will be seen by retail investors as safe due
diligence for investment in such trusts. These instruments, in turn, will revive the beleaguered real estate and infrastructure companies and provide much needed relief to the commercial real estate sector that is facing liquidity crunch and delay in completion of existing projects,” Shroff said.
Shroff said InvITS would bring in retail investors and offer them the opportunity to earn regular returns as is the case with corporate bonds and fixed deposits with the added possibility of an upside on equity (capital gains). This would be unlike tax deducted at source in case of fixed deposits and bonds.
The RBI monetary policy outcome added some volatility to the Indian stock markets on Thursday. Benchmark indices Sensex and Nifty moved in a narrow range with negative bias before closing marginally lower after the RBI kept its repo rate unchanged at 6.25 per cent but raised reverse repo rate by 25 basis point to 6 per cent.
Sensex touched a low of 29,817.59 and high of 29,954.25 before the final close at 29,927.34, down 0.16 per cent or 46.90 points. Nifty 50 index closed flat at 9261.95, down by 0.03 per cent or 3.20 point.
Foreign portfolio investors were net buyers of Indian equities worth Rs 142.68 crore while the domestic institutions were net sellers by Rs 205.64 crore.
raviranjan@mydigitalfc.com
