Amid heavy sell-off in housing finance stocks led by DHFL, benchmark indices Sensex and Nifty observed a major crash. While BSE Sensex recovered nearly 900 points after plummeting over 1,100 points within a matter of minutes in afternoon session, NSE Nifty cracked below the 11,000 mark, falling 367.90 points, or 3.27 per cent, to touch a low of 10,866.45, before recovering over 300 points to traded near 11,169.90. The shares of Dewan Housing Finance Corporation Limited (DHFL) plunged 59.67 percent to Rs 246.25, its 52-week low, on BSE.
The shares of Dewan Housing Finance Corp. Ltd (DHFL) were trading 41.58 percent lower at Rs 356.75 per share, rebounding from an intraday low of Rs 246.25, at the time of reporting. The company chairman calmed the market by saying that DHFL is well placed in terms of liquidity. He also said that there are no pledged shares and no loan has been availed against pledged shares.
“Big surprise and a shock to me. Sitting on strong liquidity position. We have been extremely conservative in maintenance of liquidity. There is no default whatsoever. The repayments are not even due yet. There is ample liquidity lying with us in the system to take care of interest as well as the principle payouts over the next couple of quarters. All this what we are seeing is panic-stricken market reaction. Total liability position till 31 March is just Rs 4,800 crore; obviously there is some amount of CP that is there in the system, but it’s not a very big amount. At the same time there is close to Rs 10,000 crore of liquidity available with us in the system other than collections that we accrue on a monthly basis. Those collections are anywhere between 2500-3000 crore. Not to go on a pledge shares; no loan against shares NPA position is strong; asset quality is top notch,” Kapil Wadhawan, MD, DHFL told CNBC TV 18.
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.
Terming the crash as a good buying opportunity, Madhu Kela of Reliance Capital told ET Now, “Looks like a technical sell-off Their short-term liquidity is very very good; enough liquidity to match liability. Speculative unwinding Long term investor, if you understand the company and faith in management, excellent opportunity to buy these companies; if you think the management is good and will come out stronger, then it’s a good opportunity to buy the shares. Stock markets to worry about the liquidity of companies which have high credit ratings with good liquidity is purely speculative. Even if the interest rates are going up, the lending rates will also go up; to think that either the news is good, or the price is good.”