Sobha Ltd

The BSE realty Index is on the surge today, going up 1.5% intra day. Of the 10 stocks in this Index, 8 are on the advance mode while only two are in the red. The gainers pack is led by Sobha, which has been sticking to its position at the top gainer on the BSE right since the opening bell. The stock price is currently up almost 10% at Rs.374.

There is no new apparent news brewing in the sector except for some bottom fishing by traders.

For the realty sector, the moods remain somber and no real buying is happening at the ground level. In fact prices across India have come down by an average of 10-14%.

Thus today what we are seeing is just a trading opportunity.

It could also be attributed to the new interest subsidy announced. The Govt announced that loan applicants with annual incomes from Rs.6 lakh to Rs.18 lakh per annum will be eligible for interest subsidy on housing loans. Those who have been sanctioned housing loans and whose applications are under consideration since January 1 this year are also eligible for interest subsidy.

In the guidelines, the tenure of loan has been capped at 20 years. The total interest subsidy accruing on these loans amounts will be paid to the beneficiaries up front, thus reducing the burden of Equated Monthly Instalment (EMI). 

Interest subsidy will be provided on loans for construction or acquisition of a house with a carpet area up to 90 sqm by those earning ?12 lakh per annum. Those earning up to ?18 lakh per year can avail themselves of the subsidy on a purchase of a house with a carpet area up to 110 sqm.

The company usually gives a heads-up on its quarterly performance before the announcement of its financial numbers. The Q4 performance update could happen in the first week of April.