Markets Cheer! Realty Stocks Zoom After RBI Puts a Pause on Rate Hike

The Indian equity markets recovered from early losses on Thursday after the Reserve Bank of India’s (RBI) surprise pause in rate hikes – that kept the repo rate unchanged at 6.50 per cent, as against wide expectations for a 25 basis point (bps) hike. “The MPC (Monetary Policy Committee) decided unanimously to keep the repo rate unchanged at 6.50 per cent in this meeting of the MPC with readiness to act should the situation so warrant,” said RBI governor Shaktikanta Das.

Nifty Realty was among the top-performing sectoral indices today as the industry cheered the decision after being impacted by a deceleration in demand due to high inflation and rising interest rates.

“The sector has weathered multiple home loan interest rate increases from a low of 6.5 per cent to 8.75 per cent. Therefore, a pause in any further rise in the lending rates should support the existing growth momentum in the housing sector,” Shishir Baijal, Chairman & Managing Director, Knight Frank India said.

Nifty Realty surged over 2 per cent after RBI Governor’s announcement to hold the repo rate at 6.5 per cent.

“Much against general expectations, the RBI decided to keep the repo rates unchanged at 6.5 per cent today. This is indeed good for the residential real estate market, which faces a tough road ahead amid massive layoffs by large corporates the world over. India is not decoupled from global economic dynamics and their invariable impact on the housing uptake here. The RBI’s decision to keep the repo rates unchanged comes as a welcome respite to homebuyers,” said Anuj Puri, chairman at Anarock Group.

The pause in rate hike particularly gives relief to affordable and mid-segment homebuyers who feared a possible rate hike today would have made property-buying via home loans even harder, said Puri.

After the continuous increase in interest rates pushed up the home loan rates over the past year, the industry expects cuts in interest rates going forward.

Nifty Realty was up 2.13 per cent on Thursday after the monetary policy decision with Godrej Properties leading the rally with a 4 per cent jump.

The MPC voted unanimously to keep the repo rate unchanged. It decided to take a pause after consecutive rate hikes in 6 previous policies. However, the governor highlighted that the MPC’s decision to pause repo rate is for this meeting only.

“While we have kept the policy rate unchanged, this decision was taken based on our assessment of the macroeconomic and financial conditions with reference to information available up to today. Our job is not yet finished and the war against inflation has to continue until we see a durable decline in inflation closer to the target,” said Das.

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