AMCs, financial stocks jump up to 13% after RBI announces a Rs 50,000-cr special liquidity facility for MFs

New Delhi: Shares of asset management companies (AMCs) and other financial sector related firms zoomed as much as 13 percent on Monday after the Reserve Bank of India announced a Rs 50,000 crore special liquidity facility for mutual funds.

RBI’s announcement follows Franklin Templeton Mutual Fund’s move to close six debt schemes amid liquidity crunch.

Nippon Life India Asset Management jumped 12.78 percent and HDFC Asset Management Company gained 7.95 percent on the BSE.

Other financial stocks also witnessed demand, with ICICI Prudential Life Insurance Company rising 11 percent, Manappuram Finance 9.99 percent, Aditya Birla Capital 7.75 percent, Mahindra & Mahindra Financial Services 6.47 percent, HDFC Life Insurance Company 6.64 percent.

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The BSE Finance index was trading 2.89 percent higher during morning trade.

Kotak Mahindra Bank gained 6.78 percent, Axis Bank rose by 6 percent, ICICI Bank 3.64 percent, HDFC Bank 2.12 percent and State Bank of India 2.11 percent.

The BSE Bank index was trading with 2.92 percent gain.

In a statement, the central bank said heightened volatility in capital markets in reaction to COVID-19 has imposed liquidity strains on mutual funds (MFs), which have intensified in the wake of redemption pressures related to the closure of some debt MFs and potential contagious effects therefrom.

The stress is, however, confined to the high-risk debt MF segment at this stage and the larger industry remains liquid, it said.

“With a view to easing liquidity pressures on MFs, it has been decided to open a special liquidity facility for mutual funds of Rs 50,000 crore,” it said.

Meanwhile, domestic stock exchanges were trading on a positive note with benchmark indices Sensex trading with 691.95 points up at 32,019.17.