Shares of mortgage company HDFC today rose by over 3 per cent following reports that housing finance regulator NHB has lowered the risk weightage for loans extended by such companies.
HDFC's scrip ended 3.23 per cent higher at Rs 769.35 on the BSE. In intra-day trade, the stock gained 4.79 per cent to Rs 781.05.
At the NSE, the scrip settled at Rs 770, up 3.09 per cent from its previous close.
In an equity research report, Morgan Stanley said the decision of the National Housing Bank (NHB), which regulates housing finance companies (HFCs), to lower the risk weights for loans extended by such companies would benefit HDFC.
Lower risk weight means lesser capital that an HFC has to set aside for providing a home loan.
NHB has lowered risk weights and standard provisioning on certain categories of individual housing loans and loans to commercial real estate.
"These measures will help release capital on existing loans for housing finance companies and also lower capital requirements structurally on new loans," Morgan Stanley said in a report dated August 9, 2013.
"HDFC will benefit significantly. This will structurally improve HDFC's profitability," the report added.