This also includes projects that have been declared non-performing assets (NPA) or admitted for insolvency proceedings. The move is likely to help 4.59 lakh housing units across the country.
Cheering this announcement, the BSE Realty index opened nearly 3 per cent higher at 2161.60. Most of the real estate players were also trading in the green with Sobha gaining 5 per cent in the early trade. It was followed by Indiabulls Real Estate (up 4.94 per cent), Prestige (up 3.48 per cent), Godrej Properties (up 2.74 per cent), DLF (up 1.75 per cent), and Phoenix (up 1.67 per cent).
Among other players, Arihant Foundation and Housing, Ansal Housing, Peninsula Land gained between 9-20 per cent in the early trade. Ganesh Housing Corporation, Marathon Nextgen Realty and Puravankara were also up over 5 per cent.
Niranjan Hiranandani, President (National), NAREDCO and MD, Hiranandani Group said, “Positive impact of the move include generation of employment, revival of demand for cement, iron and steel industries and relieve in stress in other major sectors of the economy,” he added.
Cement firms including Deccan Cements, Shiva Cement, Prism Johnson and NCL Industries gained between 2-5 per cent, while the benchmark BSE Sensex was up 178 points, or 0.44 per cent, at 40,648 at around 9.25 am (IST).
Ajay Bodke, CEO, PMS, Prabhudas Lilladher added that real estate developers like DLF, Godrej, Oberoi, Sobha, Purvankara, Kolte-Patil, Brigade etc, as well as EPC companies deriving substantial revenues from real estate like NBCC, Ahluwalia and of course L&T, would remain in focus in Thursday’s trade.
Shares of NBCC were trading over 10 per cent up at Rs 43.35, while Ahluwalia Contracts was trading 4.29 per cent higher at Rs 313.40.
Finance Minister Nirmala Sitharaman said the Alternative Investment Fund (AIF) will comprise Rs 10,000 crore coming from the government and the remaining being provided by state insurer LIC and the country’s largest lender SBI.
The minister also said several sovereign funds have shown interest and may join the scheme at a later stage.
Sameer Kalra, Founder, Target Investing added that the move is positive to improve sentiment among the real estate buyers and developers. It will also provide relief to the developer financiers as the project completion gets done, the repayment of the dues against the project can be made. It would reduce inventory that has been adding on and has put pressure on price of the units along with denting the cashflow of the developer.
“Cement, housing finance players and paint sectors will also benefit from the news,” Kalra added.
Indiabulls Housing Finance, Repco Home, PNB Housing, LIC Housing Finance and DHFL also advanced up to 11 per cent after the announcement made by the government.
“In the realty sector, our top picks are Oberoi Realty, Godrej Properties whereas Suntek realty and Sobha could also do well. In housing finance, HDFC will continue to dominate whereas Canfin home finance could also do well from here,” said Amit Gupta, Co-Founder and CEO, TradingBells.