Yesterday I wrote about the effect of RBI rates cut. I was wondering whether banks will cut rates or not. Today after the meeting between FM and bankers, public sector units have decided to reduce rates by up to 75bp. Moreover, FM promised to provide adequate liquidity to the real estate sector. RBI would soon take a decision on extending a line of credit of Rs 10,000 crore to the National Housing Bank to ensure that adequate funds were available for the housing sector. Privates banks such as ICICI and HDFC have hinted on lowering rates as well. This might has brought some smile on the faces of Mr. K.P. Singh and Mr. Chnadra who were active lobbying for the same.
These development gave positive news to the market. Investors showed interests in beleaguered real estate companies. The BSE Realty index turned best performer among sectoral indices, with a hefty rise of 12.14%. The next thing to ponder over is whether banks will lower risk aversion for developers.
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