Liquidity woes roil markets FinMin looks to allay NBFC woes

Sensex tanks 536.58 points, Nifty slips below 11K-mark

Benchmark BSE Sensex on Monday suffered its worst single-day loss in seven months, extending its fall for a fifth day due to a meltdown in banking and auto stocks on liquidity concerns and a rout in global markets.

The 30-share index tanked 536.58 points or 1.46 per cent to settle at a two-month low of 36,305.02, logging its biggest single-day loss since February 6 when it declined by 561.22 points. This is the weakest closing since July 11 when it settled at 36,265.93. The index dropped a total 1,785.62 points or more than 5 per cent in five sessions, wiping out Rs 8.48 lakh crore of market wealth.

Led by the extreme bearish market sentiment, the market capitalisation of BSE-listed companies went down sharply by Rs 8,47,974.15 crore to Rs 1,47,89,045 crore.

Factors like crude oil prices hitting a four-year high, liquidity concerns after defaults by IL&FS, the rupee retreating a low of 72.73 against the US dollar beset investors.

The broad-based Nifty of the National Stock Exchange crashed below the 11,000 mark, declining by 168.20 points or 1.51 per cent to end at 10,974.90.

Liquidity concerns and reports that China has called off planned trade talks with the US weighed on the market sentiment, brokers said.

"This turmoil which was triggered last week by housing and NBFC's continued to trouble the market as panic spread. In spite of assuring statements by key government and institutional leaders, market was concerned about the near-term headwinds like quality and increased cost of funds along with tighter liquidity," Vinod Nair, Head of Research, Geojit Financial Services Ltd, said.

Of the 30 Sensex scrips, 24 declined with Mahindra & Mahindra emerging as the biggest loser. Mahindra and Mahindra fell by 6.46 per cent while Maruti and Bajaj Auto decline by 3 per cent and 1.7 per cent respectively.

Financial stocks led by HDFC also took a hit. HDFC dropped 6.22 per cent, IndusInd Bank by 4.94 per cent, ICICI Bank by 2.8 per cent, Kotak Bank by 2.6 per cent, HDFC Bank by 2.16 per cent, and SBI by 2.04 per cent.

Yes Bank fell by another 0.35 per cent, taking its total losses to more than 29 per cent after the RBI curtailed the term of its founding CEO Rana Kapoor.

Other index losers included Bharti Airtel, Adani Ports, Tata Motors, Tata Steel, Asian Paint, Wipro, Hero MotoCorp, Sun Pharma, HUL, ITC Ltd, L&T and PowerGrid which fell up to 4.94 per cent.

Bucking the trend, IT stocks TCS and Infosys rose by 4.5 per cent and 1.5 per cent. Coal India rose by 2.1 per cent while Reliance gained 1.27 per cent. NEW DELHI: Seeking to calm the nerves of worried investors, Finance Minister Arun Jaitley said on Monday that the government would take all measures to ensure adequate liquidity for non-banking financial companies (NBFCs) and mutual funds.

The minister's remarks come in the wake of stock markets witnessing sudden and stiff fall in intra-day trade on Friday over concerns of liquidity crisis being faced by some of the NBFCs.

"The government will take all measures to ensure that adequate liquidity is maintained/provided to the NBFCs, the mutual funds and the SMEs," Jaitley tweeted ahead of the opening of stock markets. The RBI and market regulator Sebi said on Sunday that they were closely monitoring the developments in the financial sector and were ready to take "appropriate actions" to calm the jittery investors.

NBFC and housing finance stocks continued to slide on Monday, falling up to 8.4 per cent on fears of liquidity crisis. Shares of Edelweiss Financial Services plunged 8.43 per cent, Indiabulls Housing Finance 7.57 per cent, PNB Housing Finance 7.56 per cent, Cholamandalam Investment and Finance Company 7.15 per cent, Can Fin Homes 6.39 per cent and Gruh Finance 5.88 per cent on BSE. Among others, Muthoot Finance plunged 5.84 per cent, GIC Housing Finance 5.36 per cent, Repco Home Finance 5.30 per cent and LIC Housing Finance 2.60 per cent. Asset management companies' stocks also took a beating, with Reliance Nippon Life Asset Management falling 5.46 per cent and HDFC Asset Management Company 2.91 per cent on BSE.