Mumbai: Despite an assurance from the finance minister, RBI and Sebi, investors sold their stocks heavily pulling down equity markets sharply on Monday.
Financial sector stocks came under heavy selling pressure for the second consecutive day on concerns regarding liquidity crisis in non-banking finance companies (NBFCs) amidst a rise in the cost of funds.
On the global front, crude oil prices hitting the crucial $80 level mark and escalation of tariff war further weighed on investor sentiments.
The Sensex plunged 536.58 points to end the day at 36,305.02 while the Nifty slipped below the crucial 11,000 level mark to end the day at 10,967.40, down 175.70. Most NBFCs are now down 20-60 per cent from their 52-week highs.
“Depreciating rupee, rising crude and deficient monsoon was affecting Indian equity markets. Fears of default in housing finance companies led to sharp fall in their stock prices. Some participants feared that because of IL&FS’s default, funding cost for NBFCs would zoom and result into sharp deterioration in their margins. Sharp losses in NBFC stocks have triggered a vicious cycle. Losses in leveraged positions are leading to selling in other stocks to cover those losses, which in turn is fuelling further losses in markets,” said HDFC Securities’ V.K. Sharma.