Stock market ends five-day winning streak
At close, Sensex was down 609.28 points, or 0.82%, at 73,730.16. Meanwhile, Nifty opened higher at 22,620.40 and touched a low of 22,419.90 in intraday trades.
Rural India focussed lender Mahindra & Mahindra Financial Services led the entire sector sharply lower on Tuesday as investors fretted about the ongoing demonetization drive's impact on quarterly earnings of such companies who lend to the poorest of poor in a market where normal banking channels are non existent.
Here is the latest position of NBFCs in the market:
* Prime Minister Narendra Modi's surprise move to cancel the legal tender status of the 1,000-rupee and 500-rupee note, on November 8, has sucked out nearly 80 per cent of the circulating currency in the cash-based economy.
* Rural India is in sharp economic distress over the past month as public sector banks are mostly focussing their attention on meeting urban demand for new notes.
* While the government works overtime to cut down on such stress, various media reports have pointed to farmers being unable to pay previous loans, not being able to purchase adequate seeds and fertiliser for the sowing season and facing a severe cash crunch.
* Such reports have prompted many investors to press sales on rural focussed lenders such as M&M Finance and microlender Bharat Financial Inclusion. Urban lenders such as Bajaj Finance, Dewan Housing Finance and Indiabulls Housing Finance, too, have borne the brunt of selling.
* Persistent expectations of a further fall in real estate prices has also curtailed demand for home loans, one of the few bright spots in a slowing economy.
* Meanwhile 10 NBFCs fell between 0.1-3.6 per cent in late morning trade on the NSE.
* Top losers were M&M Finance, down 3.6 per cent to 266 rupees. Indiabulls Housing dropped 2.2 per cent to 679 rupees.
* Bharat Financial Inclusion fell 2.7 per cent to 676 rupees and Bajaj Finance was down 1.6 per cent to 834 rupees. In comparison, the benchmark Nifty traded flat at 8,196 points.
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