scorecardresearchReal estate stocks trade higher after import duty cuts

Real estate stocks trade higher after import duty cuts

Updated: 23 May 2022, 01:44 PM IST
TL;DR.
The government on Saturday reduced import duties on some raw materials, such as PCI and coking coal, from 2.5% to zero, while met coal, coke, and semi-coke have been reduced from 5% to zero.
Due to the Russian -Ukraine war, some of the key housing raw materials have risen by 100%.

Due to the Russian -Ukraine war, some of the key housing raw materials have risen by 100%.

The Nifty and Sensex both were up more than half a percentage point in trade on Monday. The Nifty 50 index was up 93.25 points or 0.57% at 16359.05. while the S&P BSE Sensex was up 569.89 or 1.05% at 54,896.21 at 13:30 IST.

The Nifty Realty index was trading in the green, up 1.85 points, or 0.46%, at 402.80.

Indiabulls Real Estate Ltd (up 4.95%), Sunteck Realty (up 1.42%), DLF Ltd (up 1.10%), Godrej Properties Ltd (up 0.59%), Oberoi Realty Ltd (up 0.33%), and Prestige Estates Projects Ltd (up 0.28%) were the top gainers among the Nifty Realty Index index components.

On the other hand, Macrotech Developers Ltd (down 2.32), and Sobha Ltd (down 2.50%).

 

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Nifty Realty has dropped roughly 25.25 points, or 5.87%, Since RBI rate hike. 

The government's decision on Saturday to lower duty on some steel raw materials, levy charges on steel product exports, and take measures to improve cement availability is expected to help real estate developers reduce construction costs.

Realty developers have been voicing their concerns over the spike in prices of steel and cement, key construction raw materials, in the backdrop of supply disruptions owing to the global geopolitical situation.

In a bid to tackle input cost pressures, several developers have already increased residential property prices by 6-8% across key markets in the country, including Mumbai, Delhi-NCR, Bangalore, Pune, and Hyderabad, in the last few months. Apart from increasing prices, developers were also considering slowing down construction work, ET Reported.

Due to the Russian -Ukraine war, some of the key housing raw materials have risen by 100%.

Prices of domestic hot-rolled coil (HRC) surged to 76,000 per tonne in April 2022 from 39,200 per tonne in March 2020.

The price of coking coal, which is used in the production of steel, rose 47% to $670 per tonne in the last three weeks from $455 per tonne in late February, due to the flooding of mines amid high demand from high countries that are traditionally imported from Russia, said CRISIL in a report.

According to media reports, the pan-India average cement price rose by over 10% to 395 per 50 kg bag as of March 22, 2022, on a month-on-month basis. It grew by 11% based on the year-on-year comparison.

“The momentous move by the government to reduce import duties on steel products should provide a sigh of relief to all stakeholders. Additionally, reduction in import duty of iron ore and steel intermediates will further bolster the availability of raw materials domestically, cool off the prices of steel products, and help tide the rise in prices of projects, strengthening consumer sentiment,” said Harsh Vardhan Patodia, President, CREDAI.

Experts believe a reduction in the price of fuel tax to pre-COVID levels will help bring down the transportation costs of all raw materials and essentials in industries agnostic of their businesses and reduce the pressure on the end consumers.

Going forward, developers propose that the state government reduce state-specific fuel duties in order to have a direct impact on the rise in inflation.

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REIT offer exposure to real estate market without a lot of the hassles that usually come with it. 
First Published: 23 May 2022, 01:44 PM IST