Sensex slips on margin woes

Mumbai: A lower than expected quarterly number from index heavyweight RIL and concern regarding liquidity crisis in non-banking finance companies (NBFCs) triggered a broad based sell-off on Friday that saw both Sensex and Nifty lose 1.5 per cent each.

While the shares of RIL plummeted 4 per cent after its earnings from refining business fell short of expectation, the shares of Yes Bank gave up 6.06 per cent after the Reserve Bank of India (RBI) once again rejected the lender’s request for extending the term of MD & CEO Rana Kapoor.    

The Sensex slumped 463.95 points or 1.33 per cent to end the day at 34,315.63 while the Nifty closed the session at 10,303.55, down 149.50 points or 1.43 per cent. India’s volatility index (VIX) jumped 10.05 per cent suggesting that traders have aggressively bought options contract as a hedge against any unexpected move in the market.

“Mixed earnings from latest set of results and volatility in global market were putting pressure on markets. FIIs flows are strained due to increased global bond yield and trade war worries, hence funds are shifting from non-dollar assets. Foreign investors are concerned about the fast pace of increase in interest rates and trade war worries, which is likely to slow down the world economy. IMF has reduced world GDP growth due to concern over the forward effect of higher cost of funds and protectionist world. IT sector witnessed profit booking on concerns of tightening H1-B visa, while sell-off in NBFCs continued this week also,” said Vinod Nair, head of research at Geojit BNP Paribas.

Meanwhile, the shares of NBFCs including housing finance companies continued their slide on liquidity concerns. While index heavyweight Housing Development Finance Company skidded 4.32 per cent, PNB Housing Finance and DHFL plummeted 18.55 per cent and 10.37 per cent respectively.