Some learnings from the NBFC stress

The sector has been a market leader in terms of delivering shareholder returns. It is unlikely this trend will continue

It has been about two months since IL&FS first defaulted. Since the default, we have been through a torrid period with debt markets freezing for certain issuers, the Reserve Bank of India (RBI) being forced to pump in liquidity and a general lack of confidence in the NBFC (non-banking financial company, including housing finance firms) sector. Stock markets have taken it on the chin, with many of the NBFCs down by 30 to 40 per cent. The damage has spread to other stocks and sectors as well, the mid-cap indices are down 35 per cent in dollars and small-cap stocks