NBFCs nervousness continues

about 3 months ago
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NBFCs continue to remain in the deep red. Muthoot Finance slipped almost 7% to Rs.428; LIC Housing Finance is down 3.5% at Rs.422.30; Repco Home hit a new low at Rs.429; Indiabulls Housing slipped over 7.5% to Rs.981.15; Ujjivan Financial Services hit a new low at Rs.277.05; Cholamandalam Invst Fin is down over 6% at Rs.1190.

Obviously the words of Arun Jaitley, saying that said the government will take measures to maintain liquidity in NBFCs have provided no succor. The fall in NBFCs is steep on growing fears of liquidity crisis. SBI too has denied presence of any cash crunch but the defaulting of IL&FS has created a sense of panic. Add to that, the fears unleashed on Friday by Dewan Housing Finance which sold debt in the secondary market at a yield higher than what the debt was trading at. This is what led to the crash on Friday, with fears growing that liquidity and demand conditions have weakened in the market.

Dewan Housing released a statement today stating that that the company has neither defaulted on any bonds or repayment of its financial obligations, nor has there been any instance of delay on any repayment of any liability. On September 21, 2018, DHFL fulfilled its commitment of repaying commercial papers worth Rs.575 crore and as per schedule and terms, is repaying Rs.400 crore on September 24,2018. Following this, the stock price today bounced back, going up 25% to Rs.438.75.

RBI and SEBI also issued simultaneous statement saying, “The Reserve Bank of India and the Securities and Exchange Board of India are closely monitoring recent developments in financial markets and are ready to take appropriate actions, if necessary,” yet, the market remains nervous and unconvinced.

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