(Bloomberg) --
India’s real estate financiers surged after the central bank relaxed conditions to set aside cash for loans offered to small businesses or to fund individuals’ purchases of homes and vehicles.
The Reserve Bank of India also allowed banks to continue to treat as ‘standard’ defaulting loans to commercial real estate borrowers if the repayment delays were due to reasons “beyond the control” of the company.
“This is a big move and will bring much-needed relief to the cash-starved real estate sector -- and to both developers and the housing finance companies,” said Anuj Puri, chairman of ANAROCK Property Consultants.
Indiabulls Housing Finance Ltd. climbed 14.2%, the biggest advance since November. Repco Home Finance Ltd. jumped 6.7%, LIC Housing Finance rose 7.1% while L&T Finance Holdings rose 7.9%.
Among banks, RBL Bank Ltd. advanced 6.8%, IndusInd Bank Ltd climbed 4.5% while State Bank of India rose 3.5%. The S&P BSE Finance Index, a gauge of financial stocks, climbed as much as 1.6% to a two-week high.
The S&P BSE Sensex and NSE Nifty 50 Index were both up 0.5%.
Here’s a roundup of views from market participants on the policy decisions and measures
Yes Securities Ltd. (Amar Ambani)
- Reduced requirements for cash reserve ratio for retail loans is positive
- See a long pause on rates as inflation is expected to remain high in coming months
- Expect RBI to use other monetary tools like open market operations and Operation Twist to support
- Headline inflation should come off “significantly” in 2H FY21 on favorable base, fall in fuel and food prices
IndiaNivesh Securities Ltd (Ravikant Bhat)
- Accomodative stance with measures for banks, non-bank finance companies and small and mid-sized businesses are steps in right direction
- Steps for banks, shadow lenders to help ease credit flow, help banks manage stress and soften loan pricing
TradingBells (Amit Gupta)
- RBI policy is an extension of budget to boost economic growth
- NSE Nifty 50 Index may head toward 12,300 mark or even a record high in coming days if it sustains above 12,100-12,135
- Shadow lenders Housing Development Finance Corp, Mahindra & Mahindra Financial Services, Shriram Transport Finance, Bajaj Finance, Piramal Enterprises and LIC Housing Finance major beneficiaries
- Lenders including Axis Bank, Federal Bank and IndusInd Bank are key gainers; DLF, Oberoi Realty, Godrej Properties, Prestige and Sobha Ltd. benefit among realty players
Emkay Wealth Management (Joseph Thomas)
- Rate changes were not required at this juncture as interbank market has huge cash surplus
- Market liquidity to ensure short-term rates don’t move up
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