The Bombay Stock Exchange (BSE) Sensex recovered nearly 900 points after plummeting over 1,100 points within a matter of minutes in the afternoon session on major sell-off in finance stocks, despite firm global cues and rupee recovery.
The 30-share index had plunged 1127.58 points, or 3.03%, to hit an intra-day low of 35,993.64. It, however recovered nearly 900 points within minutes of the fall.
The index was trading 171.39 points, or 0.46%, lower at 36,949.83 at 1340 hrs.
Home loan player Dewan Housing Finance Corporation Limited’s (DHFL) stocks fell over 55% in the intra-day pulling down of all non-banking financial corporations’ (NBFC) stocks in the BSE on Friday.
Over 50% of DHLF’s market capitalisation was wiped out even as the management assured the investors that they have not defaulted on any commercial paper and were sitting on comfortable liquidity. At one point, the stock were trading at ₹273.80, down 55.16%.
Most of the NBFC stocks, including Indiabulls Housing Finance Limited, Bajaj Finance Limited and Gruh Finance Ltd were trading in red. Indiabulls were trading 23.5% lower.
Yes Bank stocks drop over 25%
Yes Bank was another prominent loser with stocks of the private sector lender dropping over 25% in intra-day trade after the Reserve Bank of India (RBI) extended its MD & CEO Rana Kapoor’s term only till January 2019 while the board has sought a three-year extension.
The stock were trading at ₹238.65 a share, down 25.07% from previous close.
The bank’s board will meet on September 25 to decide on the future course of action.
According to Motilal Oswal Financial Services, this development has come in as a clear setback for Yes Bank and will have implications on its growth plans.
“The potential change in business strategy post the management change, as Yes Bank goes for a course correction and fully adheres to the RBI’s requirement, will likely have an impact on its loan growth/fee income, even as the capitalization level already remains modest,” said the brokerage while lowering its target price to ₹350 from the earlier ₹444 though maintaining a buy rating.