Sensex plunges 464 pts on liquidity concerns; Reliance Industries, NBFCs drag

Market benchmark BSE Sensex plunged by 464 points or 1.33 per cent to close at 34,315.63 points due to losses in index major Reliance Industries, HDFC and Infosys. The broader NSE Nifty too fell over 150 points to crack below the 10,400-mark as financials, IT and energy stocks declined.

Sentiments also took a hit on sell-off in NBFCs, led by Indiabulls Housing Finance, Dewan Housing Finance, IL&FS Engineering and Construction which dropped up to 16.55 per cent on prevailing liquidity concerns, brokers said.

Reliance Industries dropped up to 7 per cent in day trade before settling nearly 5 per cent down on BSE despite record financial results for the second quarter. Meanwhile, the Reserve Bank Friday announced more steps to increase liquidity flows to the non-banking financial companies.

The RBI permitted banks to use government securities equal to their incremental outstanding credit to NBFCs, over and above their outstanding credit to them as on October 19, to be used to meet liquidity coverage ratio requirements.

Stocks of automakers too faced the heat on fears of lower sale this festive season due to prevailing lower liquidity from NBFCs. The indices closed with losses for the week. The Sensex lost 417.95 points, while the NSE Nifty fell 168.95 points, during the period.

Cues from other Asian markets were mixed with early losses were erased as China shares rebounded in afternoon trade after government statements sought to bolster market confidence. China's banking and insurance regulator also said on Friday that it may allow bank wealth management subsidiaries to invest directly in stocks.

The 30-share Sensex opened Friday distinctly weak at 34,563.29 and continued to slide to touch a low of 34,140.32 but later recovered part of lost ground on buying in select stocks and finally closed down at 34,315.63, showing losses of 463.95 points, or 1.33 per cent.

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The gauge had lost 382.90 points Wednesday. The 50-share NSE Nifty plunged 149.50 points, or 1.43 per cent, to end at 10,303.55. During the session, it moved between 10,249.60 and 10,380.10.