Capital infusion soothes mkt, for now

NEW DELHI: Stocks of banks and non-banking financial companies (NBFCS) received a boost on Wednesday after a series of measures appeared to have at least temporarily halted fears of an impending crisis in equity and debt markets, outpacing a broader recovery in benchmark indices that have been on shaky footing for around three weeks.

The Nifty Bank Index, a gauge that represents large capitalised stocks from the banking sector listed on the National Stock Exchange (NSE), rose 3.24%, double the 1.54% growth in the broader 50-share index.

The immediate trigger for the recovery, experts said, was an announcement by the stateowned State Bank of India after trading hours on Tuesday that it is stepping up its target of buying “good quality” asset portfolios from NBFCS.

“SBI’S move to infuse more capital into the market has soothed investors’ nerves for now,” said AK Prabhakar, the head of research at IDBI Capital, while explaining that last week’s volatility was due to fears over asset-liability mismatches (ALMS) in NBFCS, especially after the Infrastructure Lending and Financial Services Ltd (IL&FS) episode.

The BSE Sensex, after opening of 34,493.21, rallied to hit a high of 34,858.35 before ending 461.42 points, or 1.35%, higher at 34,760.89.

The Nifty reclaimed the key 10,400 mark, showing a significant gain of 159.05 points, or 1.54%.

A second expert said Wednesday’s recovery suggests that the crisis was one more of sentiment than of liquidity.