Finance, bank stocks tumble up to 17.8% after Franklin Templeton MF suddenly closed 6 debt fund schemes
Finance and bank stocks tumbled up to 17.8 percent on Friday after Franklin Templeton MF suddenly closed some debt fund schemes
New Delhi: Finance and bank stocks tumbled up to 17.8 percent on Friday after Franklin Templeton MF suddenly closed some debt fund schemes.
"The bears took grip over the Indian markets after two days of rebound. The benchmark indices opened gap down and traded with negative bias after Franklin Templeton - US-based fund house decided to shut its six India funds over liquidity crisis," said Ajit Mishra, VP - Research, Religare Broking.
The biggest drag in the Sensex pack was bank and finance stocks, led by Bajaj Finance which was the worst hit among the 30-share components, falling 9.14 percent, followed by IndusInd Bank (6.58 percent), Axis Bank (5.96 percent), ICICI Bank (5.09 percent) and HDFC (5 percent).
Shares of Nippon Life India Asset Management cracked 17.82 percent, Cholamandalam Investment and Finance Company plunged 12.51 percent, UCO Bank 9.89 percent, Mahindra & Mahindra Financial Services 9.82 percent, LIC Housing Finance 9.12 percent, Ujjivan Financial Services 8.73 percent and HDFC Asset Management Company plummeted 6.38 percent.
Led by the drop in shares of these companies, the BSE finance index fell 3.91 percent.
From the bank index, Federal Bank dropped 4.12 percent, State Bank of India 3.80 percent, City Union Bank declined 2.79 percent, HDFC Bank 1.79 percent and Kotak Mahindra Bank 0.77 percent.
The BSE bank index fell 3.30 percent.
The 30-share BSE Sensex settled 535.86 points or 1.68 percent down at 31,327.22.
Franklin Templeton Mutual Fund late on Thursday announced winding up of six debt schemes, with assets under management of over Rs 25,000 crore, due to redemption pressures and lack of liquidity in bond markets amid the COVID-19 crisis.
"...winding up of a few debt schemes by a large fund house in India added to the selling pressure witnessed in Banks and NBFC stocks," S Ranganathan, Head of Research, LKP Securities said.
"On the domestic front, Franklin Templeton Mutual Fund announced winding up of six debt schemes due to redemption pressure and lack of liquidity in bond markets amid the COVID-19 crisis, which added to the selling pressure," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.
This is the first instance when a fund house is shutting its schemes because of coronavirus related pandemic.
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