RBI cuts repo to help Real Estate

In order to assist real estate companies tide over the current credit crunch and weak demand, RBI has cut repo and reverse repo rate by hundred bps each on Saturday and allowed restructuring of commercial real estate loans up to June 30 next year. The loans granted by banks to housing finance companies with a ticket value of up to twenty lakh rupees to home buyers will be classified under priority sector. This means a home buyer gets a loan upto twenty lakh rupees at a lower rate even from HFCs, thus getting a wider choice of lenders.

The government said that it was also scrapping import duty on naphtha for the power sector and export duty on iron ore fines, letting a state-run infrastructure firm Infrastructure Finance Company Ltd issue tax-free bonds worth ten thousand crore rupees and cutting a central valued-added tax rate by four percentage points.

Shifting focus to global markets, US stocks jumped on Friday as investors bet that a steep drop in oil prices will boost consumer spending, lifting retail stocks and offsetting government data showing half a million jobs were lost in November.

The Dow Jones Industrial Average gained 259.18 points, or 3.09%, to end at 8,635.42, the Standard & Poor’s 500 Index climbed 30.85 points, or 3.65%, to 876.07 and the Nasdaq Composite Index rose 63.75 points, or 4.41%, to close at 1,509.31.

Asian markets too edged higher Monday with financial leading the charge on hopes of further support measures from global central banks and on lower oil prices. The Nikkei climbed 2.28%, Topix gained 1.44%, Hang Seng surged 5.28% and Straits Times was up 0.94%.

Back home, equities ended sharply lower Friday as traders booked profits after a sharp rally in previous session. Benchmarks underperformed the broader markets as IT and metal heavyweights fell on weak global economic outlook. BSE’s Sensex closed at 8,965.20, down 264.55 points or 2.87%. The 30-share index touched a low of 8914.38 and a high of 9340.69 in the day. NSE’s Nifty ended at 2714.40, down 73.60 points or 2.64%. The index hit an intra-day low of 2701.35 and a high of 2821.15.

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