Realty shares acted as a major drag on the stock market today, plunging up to six per cent on the bourses after the Reserve Bank increased requirements for banks to keep money aside while lending to commercial real estate players.

Analysts feel with an aim to tighten the liquidity situation further and cushion the sector from building up non-performing assets, the RBI today increased provisioning requirements for loans to commercial real estate sector to one per cent from 0.40 per cent.

The 14-share BSE realty index plunged 6.24 per cent to close at 4,046.04 points. During the trade, the index witnessed a low of 3,973.78 points, down 7.91 per cent over the last close.

Shares of the country’s largest real estate player, DLF, today plunged 6.58 per cent to close at Rs 401.80. During the intra-day trade, the scrip had plunged 7.17 per cent to witness a low of Rs 399.25 on the BSE.

“Realty stocks has been under selling pressure for the past few days. Investors booked profit today on concerns that loans would become costlier in near term,” SMC Global Vice President Rajesh Jain said.

Domestic brokerage firm Religare said in its market note that the RBI is likely to hike the cash reserve ratio by 125 bps by the end of this fiscal. “The rate sensitive sectors (banking, realty, auto etc) should see a re-rating, as also their earning estimates going forward,” it said.

The RBI measure would mean that Re 1 has to be kept aside for every Rs 100 lent by the bank to commercial realty projects against 40 paise earlier.

According to industry experts, increasing the provisioning requirement will reduce funds availability for commercial projects and thus result in further delays in completion.

Unitech settled the trade with a loss of 7.65 per cent at Rs 85.65 after plummeting to a low of Rs 83.85.

Other major sectoral losers include Parsvnath (7.22 per cent), HDIL (8.65 per cent) and Omaxe (9.67 per cent.

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