Mutual fund houses are reducing their exposure to non-banking finance company (NBFC) stocks after the panic sell-off in the month of September, 2018, a new report said.
The NBFC sector witnessed net selling pressure of about 831 crore in the month of September 2018, making it the top sector in the sell list of mutual funds followed by insurance companies, said a report published by Prabhudas Lilladher.
Companies such as Shriram Transport, L&T Finance Holdings Ltd, Dewan Housing Finance, Reliance Capital among others came under higher selling pressure as fund houses were reducing their exposure to such companies after the panic sell-off in the month.
Among the large cap stocks, Shriram Transport, saw a decline of 24 percent of quantity sold, while L&T Finance Holdings saw a decline of 11 percent quantity sold in September.
In the mid cap stocks, DHFL lost more than 50 percent in trade with the stock hitting a 19-month low of Rs 274.75 on September 21, saw a decline of 62 percent of quantity sold in September.
The plunge in NBFC stocks started after reports emerged that Infrastructure Leasing and Financial Services Ltd (IL&FS) and its units had defaulted on repayments, and accelerated after rumours that DSP Mutual Fund had sold commercial papers issued by DHFL in the secondary market at a discount.
As many as 39 stocks in the non-banking financial space have fallen by up to 53 percent in September, including the likes of Dewan Housing Finance ltd (down 53 percent), Reliance Capital (down by over 32 percent), L&T Finance (lower by over 29 percent), Indiabulls Housing Finance (dipping by 26.5 percent).
Despite the continued volatility in the equity market, the inflow into the equity mutual fund schemes recorded a robust growth in September.
Equity mutual funds, including Equity Linked Savings Scheme (ELSS) gained a net inflow of Rs 11,172 crore as compared to Rs 8,375 crore in August 2018, according to Association of Mutual Funds of India (AMFI).
First Published: IST