Shares of housing finance firms came crashing sharply on Friday, with Dewan Housing Finance tumbling up to 60 percent on massive selling.
The scrip of Dewan Housing Finance Corporation plummeted 59.67 percent to Rs 246.25 — its 52-week low — on BSE.
Among others, Indiabulls Housing Finance nosedived 35 percent, Gruh Finance tumbled 17.66 percent, Can Fin Homes plunged 14.55 percent, PNB Housing Finance tanked 9.23 percent.
Dipan Mehta, member, BSE and NSE; Nilesh Shah of Kotak Mahindra Asset Management Company; Ashwani Gujral; Deven Choksey of KRChoksey Investment Managers; market veteran Madhu Kela; Lakshmi Iyer, CIO Debt Kotak MF; Ashu Madan of Religare Securities and Prakash Gaba shared their views and outlook on the market.
“What we are witnessing is a falling knife as far as non-banking finance companies (NBFC) stocks are concerned and it’s better to stay put at this point of time. As far as the rest of the market and the NBFC stocks are concerned, the sentiment is getting sour so it’s better to wait it out and conserve the cash. There is no point in being brave and trying to buy at these correction. Something deeper seems to be brewing and through the days, we will come to know what this is all about. It could be the rupee or some other factor,” Mehta said.
According to Shah, “It’s always difficult to predict mania and it’s always difficult to predict irrationality, but the way things are happening, the omens are not good.”
“There are two areas where the panic has happened. One is some of the weaker NBFCs having higher amount of exposure towards the project finance in the housing finance space. Many of the housing finance projects are today facing the rough weather because of the low sale happening. That is the reason that somebody probably dumbed the stock into the market and created this particular panic. We will see the validation of that happening at the end of the day, when the trade data comes out. Second possibility is that some of the mutual funds having the exposure towards the IL&FS probably in the debt fund did some amount of selling as they have to basically report it in the quarter ended September,” Choksey mentioned.
Kela said “To me, it doesn’t look like any systemic or any big fundamental reason for this kind of decline. I think this is more tactical, technical in nature, wherein the over-leverage position in F&O segment is getting sold off and on the back of all the rumours which are there, it just got accelerated. Lot of companies have amply clarified that their liquidity situation and their credit rating and their fundamental situation is definitely not worth the market is reflecting. There is definitely a bit of caution on the borrowing side. Once the situation normalises, the people who have got strong balance sheet and have capability, will bounce back”