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Nervousness caused by news of a default by Delhi-based real-estate developer SuperTech on Wednesday continued to impact market sentiments on Friday.
The trading desks of large brokerage houses were agog with rumours of a potential downgrade in the debt rating of a leading Mumbai real-estate developer, putting severe selling pressure on non-banking finance companies’ (NBFC) stocks. Analysts said any bad news in the real-estate sector could trample market sentiments.
Big losers
The share prices of Indiabulls Housing Finance, DHFL, Piramal Enterprises, PNB Housing Finance, Edelweiss Financial, IIFL Holdings, among others, fell 10-20 per cent. The share prices of these finance companies were already down 30-50 per cent from their peak post the IL&FS fiasco.
The Sensex fell 1.33 per cent or 463 points to close at 34,315. The Nifty was down 1.43 per cent or 149 points, closing at 10,303. Both the key indices have been volatile since August. Friday’s market fall was despite the fact that other global markets were relatively calm and were trading higher.
“There is a crisis of confidence in markets. Going by the sentiment, it will be wise to secure profits during any up-move in share prices in the coming weeks,” said Vipul Engineer, an independent fund manager in Mumbai for high-net-worth clients. “Since the high point of August this year in key equity indices, if one puts it in perspective with the Elliott wave framework (a technical methodology), there are chances of a further big move downwards.”
RBI’s rescue
The Reserve Bank of India rushed to the rescue of NBFCs on Friday. The central banker allowed banks to use Government Securities equal to their outstanding credit to NBFCs, over and above their outstanding credit to them as on October 19, to meet liquidity coverage ratio requirements. Also, the limit on NBFCs for lending to non-infrastructure projects was raised to 15 per cent from 10 per cent.
A sharp decline in YES Bank and Reliance Industries, both of which fell around 5 per cent, weighed on the markets. YES Bank fell as the RBI declined an extension to its MD & CEO Rana Kapoor, while RIL was impacted after its quarterly results, announced this week.
The fact that US markets had opened higher in trading on Friday could calm nerves, analysts said. The Dow Jones index rose 200 points or nearly 1 per cent on opening. The Nasdaq rose 100 points or 1.25 per cent.
Earlier in the day, China’s central bank, too, announced measures to ease liquidity after the Shanghai Composite index was near its four-year low this week.
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