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Last Updated : Sep 21, 2018 07:07 PM IST | Source: Moneycontrol.com

Panic among NBFCs drag Sensex, experts say good time to cherry-pick quality stocks

Market Veteran, Warren Buffett always says we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful

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It was a bloodbath on the Dalal Street on Friday afternoon as benchmark indices saw sharp fall and even broader market plunged. The Sensex as well as BSE Midcap indices tanked more than 1,000 points intraday while the Nifty50 fell from 11,346.80 to 10,866.45.

The sharp sell-off was largely due to panic selling in non-banking finance companies, especially after interest payment defaults on commercial papers by IL&FS to bondholders. So, traders turned cautious on fears that other companies might also default but lot of companies clarified that they have enough liquidity at hand.

The 30-share BSE Sensex cracked 1,127.6 points, or 3 percent, intraday and Nifty50 lost 368, or 3.3 percent, while BSE Midcap fell 1,069 points, or 6.7 percent, and Smallcap tanked 1,080 points, or 6.6 percent.

Close

But in a very short while, all NBFC stocks recovered from day's low on clarification.

Hence, the market also recovered from day's low. The Sensex was down 280 points while the BSE Midcap and Smallcap indices fell 1.7 percent and 3 percent at close.

Such occasions are always good opportunity to pick quality stocks with strong fundamentals, experts said.

Market Veteran, Warren Buffett always says we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

"We don't see any fundamental reason for today's fall. Today's fall seems to be triggered by technical factors," Madhu Kela, Veteran Market Expert told CNBC-TV18.

Madhu Kela said he bought some stocks in today's fall.

Lakshmi Iyer is the Chief Investment Officer of Debt and Head of Products at Kotak Mahindra Asset Management Company told CNBC-TV18 that such panic offers good opportunity for mutual funds to buy bargains in the market. "We haven't seen any major event that can hit debt fund net asset values."

IL&FS defaulted on two papers but that will not impact entire non-banking finance companies space, said Shailendra Kumar, Director & CIO, Narnolia Financial Advisors Ltd..

NBFCs are usually wholesale-funded and housing finance companies are funded through commercial papers, so the rise in 10-year bond yield will have some pressure on their margin.

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First Published on Sep 21, 2018 03:22 pm
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