Sensex retreats nearly 400 points as meltdown in NFBCS resumes

MUMBAI:FEARS of defaults by real estate companies hammered shares of non-banking finance companies (NBFCS) on Wednesday, driving benchmark equity index Sensex nearly 400 points lower after a positive start.

Shares of Indiabulls Housing Finance Ltd fell 13.17% after a Bloombergquint report, citing a Macquarie sales team note to clients, said its loans to defaultrated Supertech could be over ₹500 crore. The loan, the brokerage said citing its talks with the management, was for a specific project that is ring-fenced and earns monthly rentals of close to ₹30-35 crore, the report added.

On October 10, Brickwork Ratings had downgraded the ratings on ₹1,866.4 crore of Supertech’s bank facilities to default (D) from BB-. In a wave of selling in NBFCS, Dewan Housing Finance Corp. Ltd slipped 12.34% and Edelweiss Financial Services Ltd lost 10%. “Credit facilities of a large property developer in NCR region have been downgraded to default. Investors are concerned about its exposure mainly by NBFCS,” said VK Sharma, head, private client group (PCG) & capital markets group, HDFC Securities. “Automobile stocks were also prominent losers as many feared lower sales in this festive season on fears of rising insurance costs and lower liquidity from NBFCS,” added Sharma.

BSE’S 30-share Sensex lost 1.09% or 382.90 points to close at 34,779.58 points, while National Stock Exchange’s (NSE) 50-share Nifty closed 1.24% or 131.70 points lower at 10,453.05 points.