Realty stocks face rate reality; index down 4.2%

MUMBAI: Shares of realty companies continued to face the bear rage
Tuesday as the BSE Realty Index dropped 190.89 points or 4.20 per cent
to trade at 4,352.58.

DLF was the biggest loser on the Sensex while Indiabulls Real Estate
led the pack in the sector with a loss of 14.18 per cent.

HDIL suffered a fall of 5.71 per cent to Rs 232.75 while Purvankara,
Akruti City and Omaxe were down 4.92 per cent to 4.30 per cent, in
that order. Mahindra Lifespace was only marginally weaker.

The sector, which has seen an unprecedented boom in the last two
years, is facing a slump with banks raising lending rates in the
Reserve Bank of India's fight against inflation, which is at a 13-year
high of 11.42 per cent.

ICICI Bank is the latest to raise lending rates, announcing a 75 basis
points hike in the fixed as well as floating home loan interest. The
fixed loan interest for ICICI home loans will now be 14.75 per cent.

Home loan leader HDFC also raised its interest rate by 50 basis points
for all existing borrowers with floating rate loans. The rate hike is
75 basis points on floating as well fixed rate loans for new
borrowers.

On June 11, Reserve Bank of India hiked the repo rate--at which banks
borrow from the central bank--by a quarter basis point to 8 per cent.
This was followed by another half-a-percentage point hike in the repo
rate and cash reserve ratio on June 24.