RBI repo cut fails to cheer real estate stocks; Phoenix Mills, Anant Raj, Sobha, Oberoi Realty slip up to 5%

The Reserve Bank of India’s repo rate cut by 25 basis points failed to bring cheer to the realty sectoral stock on Wednesday, April 9.

The RBI on Wednesday slashed the key interest rate for the second time in a row to support a shuttering economy hit by reciprocal tariffs imposed by the US.

Following the rate cut, the key policy rate eased to 6%, providing relief to home, auto and corporate loan borrowers.

The central bank has lowered the GDP growth forecast to 6.5% from an earlier projection of 6.7% due to global uncertainties.

Despite the rate cut, the Nifty Realty gauge was trading 1.86% lower on Wednesday.

The Phoenix Mills, Anant Raj, Sobha, Oberoi Realty, Macrotech Developers, and Brigade Enterprises were the top laggards in the sector, tumbling as much as 4.79% on NSE.

Commenting on the repo rate cut, Anuj Puri, Chairman of ANAROCK, said, “Home loan borrowers may not see much meaningful or immediate interest rate relief. Banks have not transmitted earlier MPC rate cuts to borrowers because of higher funding costs, pressure on net interest margins, higher NPAs, and a cautious lending climate.”

“If banks do pass on the benefits of the last two rate cuts, it will be a boost to homebuyers, particularly for those eyeing affordable housing. Many first-time homebuyers who had been hesitating to take the plunge may make their move if home loan rates reduce,” Puri further explained.

Unveiling the April monetary policy after the meeting of the Monetary Policy Committee (MPC), Governor Malhotra said that in the context of the RBI, the stance of monetary policy signals the intended direction of policy rates going forward.

“Lower interest rates will make home loans affordable, which may boost housing demand across categories. This will result in increased residential sales, better liquidity in the market, and a gradual depletion of unsold inventory,” said G Hari Babu, National President of NAREDCO.

This will also encourage developers to launch new projects, especially in affordable housing, Hari Babu said.

"With the reduction in borrowing costs, more aspiring homeowners may enter the market, which will help bridge the demand-supply gap in the sector. Commercial real estate will also benefit, as easier financing may encourage businesses to expand and invest in office and retail spaces," the NAREDCO president said.