NBFC stocks continue to slide on liquidity fears; down up to 8.4 pc

NBFC and housing finance stocks continued to slide Monday, falling up to 8.4 per cent on fears of liquidity crisis.

Shares of Edelweiss Financial Services plunged 8.43 per cent, Indiabulls Housing Finance 7.57 per cent, PNBHousing Finance 7.56 per cent, Cholamandalam Investment and Finance Company 7.15 per cent, Can Fin Homes 6.39 per cent and Gruh Finance 5.88 per cent on BSE.

Among others, Muthoot Finance plunged 5.84 per cent, GIC Housing Finance 5.36 per cent, Repco Home Finance 5.30 per cent and LIC Housing Finance 2.60 per cent.

Asset management companies' stocks also took a beating, with Reliance Nippon Life Asset Management falling 5.46 per cent and HDFC Asset Management Company 2.91 per cent on BSE.

In the broader market, the BSE benchmark Sensex tanked 536.58 points to end at over two-month low of 36,305.02 Monday.

"This turmoil, which was triggered last week by housing and NBFC's, continued to trouble the market as panic spread. In spite of assuring statements by key government and institutional leaders, market was concerned about the near-term headwinds like quality and increased cost of funds along with tighter liquidity," said Vinod Nair, Head of Research, Geojit Financial Services Ltd.

Analysts said on Friday, shares of housing finance companies nosedived on rumours of liquidity crunch and scrip of DHFL plunged over 40 per cent.

On Friday the 30-share BSE Sensex suddenly tanked 1,127.58 points, or 3.03 per cent, to hit a low of 35,993.64 in afternoon trade before staging an equally sharp recovery within minutes.

"Stock markets in India started the week on a negative note and reeled under selling pressure through the day to finally close with losses of nearly 1.5 per cent. The slide in benchmark indices was led by selling pressure in banking and NBFC stocks.

"Liquidity crunch fears, consistent selling by foreign investors, rupee volatility, rising crude oil prices and trade war tensions weighed on sentiment," said Abhijeet Dey, Senior Fund Manager-Equities, BNP Paribas Mutual Fund.

Seeking to calm the nerves of worried investors, Finance Minister Arun Jaitley said Monday that the government would take all measures to ensure adequate liquidity for non-banking financial companies (NBFCs) and mutual funds.