Shares of non-banking financial companies (NBFCs) including micro finance institutions (MFIs) and housing finance companies (HFCs) experienced selling pressure falling by upto 20% on NSE in intra-day trade. The stocks extended their past three trading day’s decline after the government’s move to withdraw Rs 500 and Rs 1,000 notes.
Can Fin Homes share price witnessed the hit of 20% while Manappuram, JM Financial , Shriram Cityshare price slipped by 19%. Repco share price traded after slipping 18% and trading at a new 52 week low. Religare, Capital First and Muthoot Finance share price declined 17%, 16% and 15% respectively. Can Fin Homes, Manappuram, Shriram City, and Muthoot Finance are the Multibagger recommendations by Dynamic Levels while the rest are the top 500 performing stocks for the quarter identified by them.
The top 500 NBFCs
| Stock Name | % Decline | |||||||||
| LIC Housing | 9% | |||||||||
| Magma Fincorp | 9% | |||||||||
| Gruh Finance | 10% | |||||||||
| Equitas | 10% | |||||||||
| Mahindra Finance | 9% | |||||||||
| LT Finance | 14% | |||||||||
| Capital First | 16% | |||||||||
| Religare | 17% | |||||||||
| Bharat Financial | 14% | |||||||||
| Bajaj Finance | 11% | |||||||||
| Repco | 18% |
Multibagger NBFCs
| Stock Name | % Decline |
| Motilal Oswal | 4% |
| JM Financial | 19% |
| Cholamandalam | 13% |
| Manappuram | 18% |
| Muthoot Finance | 15% |
| Edelweiss | 12% |
| IIFL | 11% |
| Bajaj Finserv | 8% |
| GIC Housing | 14% |
| Shriram City | 19% |
| Can Fin Homes | 20% |
The recent move by Government of India to demonetize the Rs 500 and Rs 1,000 currency notes is likely to significantly discourage the malpractices supported by cash economy and fake currencies
While the medium to long term gains of this move to the economy at large and the real estate sector in particular are undeniable. Analysts expect some short term challenges. It is probable that cash-flows of the households, particularly the self-employed category, may be affected for some time due to withdrawal of 86% of the currency from the system until normalcy is reinstated and business align themselves to the non-cash mode of payments including electronic payments. This transition may happen in next couple of months. The outlook for NBFC stocks will remain negative for one to two quarters.
The business of NBFC companies has come under strain as small businesses, that depend on these companies for funds, have been gravely hit on account of demonetization of Rs 500 and Rs 1000 notes.
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