Sensex skips a heartbeat! NBFCs lower the market by 1,100 points, and recover soon after

The Sensex and Nifty crashed into the afternoon trade because of the massive sell-off of housing finance companies. Shares of non-bank finance companies (NBFCs) collapsed today and scared Sensex and Nifty, who lost nearly 1,128 points and 368 points respectively. However, the clues recovered later on the management of these companies dispelled concerns about their financial situation.

The stock of Dewan Housing Finance fell by 59.67%, or 364 points, to a new low of 246.25, the highest among the NBFCs. Other housing finance companies, such as India Bulls Housing Finance, LIC Housing and L & T Finance Holding, also saw a decline in afternoon trading.

DHL CMD Kapil Wadhawan told CNBC TV 18 that the drop in stocks was a surprise and shock. When asked if he had shares pledged or loaned for shares, Wadhawan said, "Absolutely not, it's a family policy not to go to pledge your shares." We have never done this in the future. "

Responding to the question of knowing he was aware that a fund was selling DHFL paper on Wednesday, Mr. Wadhawan added, "It's a secondary exchange between a buyer and a seller. It has nothing to do with the fundamentals of an extremely strong society.Panic has been triggered for other fundamental reasons: there seems to be a cascading effect – my fundamentals are solid, my NPA position is strong, the quality of my assets … With all this unhappy chaos on the market, puts a damper on all the other primary problems we are doing for the immediate future.These are all sentiment spoilers on the market. "

The Sensex BSE recovered nearly 900 points after dropping more than 1,100 points in a few minutes in the afternoon session on the massive sell-offs of financial stocks, despite solid global indices and a recovery in the rupee. The index of 30 stocks plunged 1127.58 points, or 3.03%, to reach a low of the day of 35 993.64. However, he recovered nearly 900 points in the minutes following the fall.

The wider Nifty NSE crossed the 11,000-point mark, dropping 367.90 points, or 3.27%, to a low of 10,866.45, before recovering more than 300 points to trade close to 11 169.90.

The Sensex finally finished down 279.62 points, or 0.75%, to 36,841.60. This is its lowest close since July 25, when it ended at $ 36,858.23.

YES Bank recorded the worst performance of the index, losing 28.71%. The Reserve Bank on Wednesday restricted the term of its founding CEO, Rana Kapoor, and asked the private sector lender to seek his replacement by January 2019.

The wider Nifty also fell in the middle of the session and finished at 11,143.10, down 91.25 points.

The indices closed with losses for the third week in a row. The Sensex lost 1,249.04 points, or 3.28%, while the NSE Nifty lost 372.10 points, or 3.23%, during the week.

Joseph Thomas, director of research, Wealth Management at Emkay Global Financial Services, said: "The events surrounding YES Bank and DHFL have sharply reduced markets." The triggering factor appears to be the sale of DHFL debt securities by AMCs well. in view, but the broader question is that of a contagion that leads to massive sales in the newspapers of other companies.The ILFS exposure has led to the sale by the institutional investor impacted from other non-related NBFCs to maintain the channel The sentiment and that seems to be rather weak as a result of the degradation of quality newspapers in a few days All these factors have influenced the markets to a large extent.But it was a little exaggeration given the fact that the markets closed much higher than the low seen earlier in the day. "

Mass sales were observed in the real estate, health care, banking, IT, consumer goods, consumer durables, consumer staples, infrastructure, metals and consumer goods indexes. power.

YES Bank was the biggest loser of Sensex in the day, reaching 34% to reach its lowest level in a year.

Other bank stocks such as PNB, Federal Bank, Bank of Baroda, Kotak Bank and SBI fell to 7.44%.

Other big losers were Adani, Tata Motors, Infosys, Sun Pharma, SBI, Maruti Suzuki and HUL, down 3.15%.

Among housing finance securities, DHFL led the pack by more than 50%, followed by Indiabulls Housing Finance, Can Fin Homes, PNB Housing Finance and LIC Housing Finance, which climbed to 17%.