Get 2 days free trial on Whatsapp with expertise analysis report for massive profit with low investment. The S&P BSE Sensex partially recovered after crashing 1,496 points in from the day’s high to settle 280 points lower at 36,842 on Friday. The index had hit an intra-day high of 37,489.24 before crashing to the day’s low of 35,993.64.
The Nifty 50 index, on the other hand, hit a low of 10,866 levels but settled 91 points lower at 11,143.
The decline came on the back of a sharp fall in NBFC stocks. DHFL skidded over 50% in intraday trade on fears of a liquidity crisis.
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NBFCs crash: DHFL tanked over 60% in trade today:
Shares of non-bank finance companies (NBFCs) took a massive beating on Friday, with DHFL and Indiabulls Housing Finance tumbling around 60 per cent and 30 per cent respectively in intraday trade. DHFL lost Rs 100 billion in the m-cap during the day. However, the stocks recovered partially after the management of both companies allayed investor concerns.
Analysts say the ongoing crisis at IL&FS created a panic and triggered the sell-off in these stocks, as it was feared that an ‘IL&FS-like’ situation was emerging across NBFCs. More specifically, rumour had it that DHFL and Indiabulls Housing Finance could find it difficult to meet their respective loan obligations going ahead.
The contagion spread to the entire banking / NBFC space with Edelweiss Financial, Bajaj Finance, Shriram Transport Finance, M&M Financial Services and Indiabulls Housing slipping 10 per cent – 30 per cent in intraday trade.
“Some of the bad housing finance companies (HFCs) that have exposure to large projects are finding it difficult to recover the funds. Thus, the inability to recover the money that could have a bearing on the financials going ahead cast a shadow on the stocks as well. That said, not all companies face this situation.