Indices fall nearly 2% over trouble at Franklin MF, Covid-19 concerns

The Sensex ended 536 points or 1.7% lower at 31,327, while the Nifty dropped 1.7% or 160 points to close at 9,154 on Friday

Trouble at Franklin Templeton MF, coupled with fresh concerns on the economic front due to Covid-19, led to a near-2 per cent fall in the indices that were on course to log their third straight weekly gains.

The Sensex ended 536 points or 1.7 per cent lower at 31,327, while the Nifty dropped 1.7 per cent or 160 points to close at 9,154 on Friday. Both ended the week with a 1 per cent loss.

Banking and financial stocks saw heavy selling after Franklin Templeton announced the closure of six schemes earlier on Thursday, with over Rs 25,000 crore in assets, amid heavy redemption pressure and low liquidity in the bond market.

Investors feared the pain could spill over to the Rs 22-trillion MF industry, with shares of Nippon Life dropping 18 per cent and HDFC MF declining 6.4 per cent.

 

 

Market experts said schemes managed by Franklin Templeton were the first high-profile casualties of the economic slump due to the lockdown, and more such incidents could not be ruled out.

Financials dominated the list of losing stocks. Bajaj Finance fell 9 per cent, IndusInd declined 6.6 per cent, and Axis Bank, ICICI Bank and HDFC declined more than 5 per cent each. Both domestic as well as foreign investors were net sellers, with the former pulling out nearly Rs 1,000 crore.

 “Indian indices fell tracking increasingly weak economic data from countries globally, especially the US. There was also uncertainty regarding the effectiveness of a vaccine that was in development. Markets are expected to remain volatile considering the rising number of cases in India and no positive signal from the ongoing earnings guidance,” said Vinod Nair, head (research), Geojit Financial Services.

Eighty-eight stocks hit their 52-week lows on the BSE. Market breadth was negative, with total advancing stocks at 775 and those declining at 1,579 on the BSE. Barring three, all BSE sectoral indices ended the sessions with losses. Realty and Finance stocks fell the most, and their gauges fell 4.15 per cent and 4 per cent, respectively.