Realty stocks in focus, gain up to 4.5 per cent

New Delhi: Realty stocks were in limelight today, rising up to 4.5 per cent, after the Reserve Bank allowed banks to invest in Real Estate Investment Trust (REITs) and Infrastructure Investment Trusts (InvITs).

Shares of DLF surged 4.48 per cent, Unitech by 3.25 per cent and Prestige Estates by 1.92 per cent on BSE. Godrej Properties (1.88 per cent) and Oberoi Realty (1.79 per cent) also advanced. The BSE realty index rose by 2 per cent to close the day at 1,704.64 points.

"The RBI's decision to allow banks to invest in REITs and InvITs will bring sanctity to these instruments from a retail investors perspective and the latter will find the confidence to invest in such trust in sync with mutual funds as an investment class.

Apart from banks participation seen by retail investors as a safe due diligence for investment in such trusts, these instruments in turn will revive the beleaguered real estate and infrastructure companies and provide much needed relief to the commercial real estate sector that is facing liquidity crunch and delay in completion of existing projects," said Kamlesh Shroff, spokesperson of BSE Brokers Forum.

Moreover, InvITS will also bring in retail investor and offer them the opportunity to earn regular returns as is the case with corporate bonds and fixed deposits with the added possibility of an upside on equity (capital gains), unlike tax deducted at source in case of fixed deposits and bonds, Shroff added. Banks are allowed to invest in equity-linked mutual funds, venture capital funds (VCFs) and equities to the extent of 20 per cent of their Net Owned Fund (NOF).

"It is proposed to allow banks to invest in REITs and InvITs within this umbrella limit. Detailed guidelines will be issued by May-end 2017," the RBI said in its first bi-monthly monetary policy for 2017-18.