Rakesh Jhunjhunwala’s Diwali shopping, stimulus lift realty stocks; Indiabulls Real Estate soars 13%

Real Estate sector stocks such as Indiabulls Real Estate, Godrej Properties, Sunteck Realty and others were seen surging on Friday morning. The up-move was aided by Finance Minister Nirmala Sitharaman’s announcement that aimed at giving a nudge to the real estate sector with tax sops for homebuyers. Additionally, ace investor Rakesh Jhunjhunwala bought stake in Indiabulls Real Estate which has now pushed the stock 28% higher in just two days. The real estate sector has been languishing amidst a pandemic as risk-averse homebuyers delayed major spending in a tight economic environment.

Big Bulls Diwali shopping

Rakesh Jhunjhunwala, or as he is often called — the Big Bull of Indian stock markets — bought 50 lakh equity shares of Indiabulls Real Estate. Data available on the bourses showed that Rakesh Jhunjhunwala’s Rare Enterprises bought stocks of Indiabulls Real Estate at Rs 57.73 per share through a bulk deal. Currently the stock is trading at Rs 62.05 per share. The transaction will translate into a 1.1% equity stake for Rakesh Jhunjhunwala in Indiabulls Real Estate.

The latest of Big Bulls transactions is estimated to have cost him around Rs 28.86 crore. Indiabulls Real Estate is engaged in the development of real estate projects and related services. Till Wednesday the stock had just gained 21% since its March lows but now has recouped 59% since the end of March.

FM boost to Real Estate

Elaborating on the Finance Minister’s announcement around the real estate sector, Sharad Mittal, CEO & Head, Motilal Oswal Real Estate said, ““Earlier this year in the Budget, the Government had provided tax relief to home buyers if the agreement value was up to 10% lower than the circle rate. With the softening of prices across markets, this price difference was in excess of 10% in some cases which kept some of the home buyers at bay.” Yesterday’s announcements increased the limit from 10% to 20% for property value within Rs 2 crore.

“The benefit of the increased differential rate would be applicable till 30th June’21, for only primary sale of residential units of value up to Rs 2 crore. This will benefit Mumbai based companies like Oberoi Realty, Sunteck in our coverage,” said brokerage and research firm ICICI Direct in a note.

Real estate and housing benefits would help improve home sales in the lower bracket,according to brokerage firm Emkay Global. “In our view, the developer would either provide a discount or increase the cash proportion in the transaction,” they added. Meanwhile Kotak Securities said that the measures announced are to reduce hardships faced by both home-buyers and developers and help in clearing the unsold inventory. The brokerage firm has a ‘Buy’ rating on Brigade Enterprises, DLF, Sobha, and Sunteck Realty.

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