Realty stocks lead market rally

Real estate companies shine on hopes of US Federal Reserve rate cut

The BSE Realty Index rose 3.04 per cent on Tuesday, recording the highest gain among all sectoral indices. Expectations of a cut in the US Federal Reserve rates and big demand for real estate stocks spurred the realty index to lead the Tuesday's rally.

The index closed at 12,182.32, a 359.44 points rise from yesterday's close of 11,822.88. Stocks of Ansal Infrastructure, Indiabulls Real Estate, Omaxe, Phoenix MIlls, and Unitech were the main gainers on Tuesday.

Analysts tracking the sector said big fund houses, which have raised large funds for infrastructure, were investing in realty stocks and pushing the prices up.

"A lot of funds are chasing the real estate stocks, which are reflected in the prices and a lot of changes are happening in the individual companies. Most of these companies are high EBIDTA companies. Hence when the market goes up, prices of these stocks go up and vice versa," said Naveen Jain, an analyst at Emkay Shares and Stock Brokers.

Shailesh Kanani of Angel Brokers adds that rate-sensitive companies in segments such as the real estate are going up in anticipation of a 25 to 50 basis points cut by the US Federal Reserve.

"The market is confident of a Fed rate cut and in the expectation of buoyancy thereafter, markets have gone up on Tuesday. So investors are on a buying spree," said Arun Kejriwal of Kejriwal Research & Investment Services.

Ansal Infrastructure was the highest gainer among realty stocks, with the stock moving up by 17.51 per cent on reports that the company has received the Uttar Pradesh government's approval to double the size of its private township project in Dadri.

Another Delhi-based developer Unitech's stock went up by 8.48 per cent, while Omaxe and HDIL rose by 6.95 per cent and 5.68 per cent respectively.

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GREAT EXPECTATIONS

The BSE Realty Index rose 3.04 per cent on Tuesday, recording the highest gain among all sectoral indices

Expectations of a cut in the US Federal Reserve rates and big demand for real estate stocks spurred the realty index to lead the Tuesday's rally

Stocks of Ansal Infrastructure, Indiabulls Real Estate, Omaxe, Phoenix MIlls, and Unitech were the main gainers on Tuesday