Stocks of non-banking financial companies nosedived on rumours of liquidity crunch and scrip of DHFL plunged over 40 percent on Friday. The stocks continued to slide Monday, falling up to 8.4 per cent on fears of liquidity crisis.
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While shares of DHFL bounced back sharply on Monday, surging 25 percent, other stocks such as Edelweiss Financial Services plunged 8.43 percent, Indiabulls Housing Finance 7.57 percent, PNBHousing Finance 7.56 percent, Cholamandalam Investment and Finance Company 7.15 percent, Can Fin Homes 6.39 percent and Gruh Finance 5.88 percent on BSE.
Among others, Muthoot Finance plunged 5.84 percent, GIC Housing Finance 5.36 percent, Repco Home Finance 5.30 percent and LIC Housing Finance 2.60 percent.
Here is how the market experts and the Reserve Bank of India responded to the current scenario.
The RBI and market regulator Sebi said on Sunday that they were closely monitoring the developments in the financial sector
and were ready to take “appropriate actions” to calm the jittery investors.
Investment firm Ashburton said the current pressure on NBFCs might be attributed to increasing cost of money.
Andrew Holland, CEO of Avendus Capital Alternate Strategies, said it looks like the issues in the financials are much worse than they think. Don't rush into NBFCs just because valuations have become attractive, he said
"We would look at quality NBFCs but the valuations there were still high and would need to come off a bit more," Holland added.
The State Bank of India (SBI) chairman Rajnish Kumar has clarified that the bank would continue lending to the non-banking financial companies (NBFCs). There are no concerns on liquidity of NBFCs amid ongoing debt crisis in IL&FS Group, said Kumar.
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 NBFCs and mutual funds.
“The government will take all measures to ensure that adequate liquidity is maintained/provided to the NBFCs, the mutual funds and the SMEs,” Jaitley tweeted.
With inputs from PTI.