Global brokerage Morgan Stanley said the National Democratic Alliance government's decision to build 3 crore houses won't help the housing finance companies' earnings much. 

What Happened: On Monday, Narendra Modi-led NDA government in its first cabinet meeting, approved the decision to build more than 3 crore houses for urban and rural people under the Pradhan Mantri Awas Yojana (PMAY). Around 4.21 crore houses were built for eligible families under the PMAY in the last 10 years. 

Morgan Stanley said the initiative might not help the earnings of the housing finance companies much. The announcement is good for sentiment, the brokerage said. Shares of housing finance companies had gained on Tuesday following the announcement. 

According to the global research firm, If announced, a credit subsidy scheme would be more beneficial. 

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The brokerage said it has constructive view on most of the housing finance companies. The valuations of the companies are attractive relative to their operating performance. 

The research firm prefers these housing finance companies from a 12-month perspective and it has “overweight” calls on PNB Housing, Aptus Value, Home First Finance and Can Fin Homes. 

Morgan Stanley has given “equal-weight” rating to LIC Housing Finance and Aavas Financiers. 

Price Action: Most of the housing finance companies were trading lower on in early trade Wednesday. 

• Shares of PNB Housing were up 0.37% at ₹811.10.
• Shares of Aptus Value were up 0.17% at ₹320.45.
• Shares of Home First Finance were down 0.48% at ₹920.10.
• Shares of Can Fin Homes were down 0.12% at ₹789.75.
• Shares of LIC Housing Finance were up 0.44% at ₹683.10.
• Shares of Aavas Financiers were up 0.59% at ₹1,858.55.

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