Domestic stock markets witnessed as much as 13 per cent jump in the shares of asset management companies (AMCs) and other financial sector related firms on Monday after the Reserve Bank of India announced a Rs 50,000 crore special liquidity facility for mutual funds to mitigate the impact of the coronavirus (Covid-19) and maintain financial stability.
RBI’s announcement follows Franklin Templeton Mutual Fund’s move to close six debt schemes amid liquidity crunch.
Nippon Life India Asset Management jumped 12.78 per cent and HDFC Asset Management Company gained 7.95 per cent on the BSE.
At 1.14 p.m. Nippon Life India Asset Management shares were up 11.58 per cent at Rs 241.50 and HDFC Asset Management Company was at Rs 2,556 up by 5.39 per cent.
Similarly, other financial stocks also witnessed demand, with ICICI Prudential Life Insurance Company rising 11.72 per cent to hit Rs 375.95; Manappuram Finance was up by 7.14 per cent at Rs 114.75.
Aditya Birla Capital lost its gains of 7.75 per cent to hit 4.78 per cent in green. Mahindra & Mahindra Financial Services followed the trend and came down to 3.49 per cent from its previous gains of 6.47 per cent.
HDFC Life Insurance Company, on the other hand, continued to rally at 7.76 per cent.
The BSE Finance index was trading 2.16 per cent higher during intraday trade.
Kotak Mahindra Bank gained 5.16 per cent, Axis Bank rose by 4.57 per cent, ICICI Bank 4.45 per cent, HDFC Bank 0.49 per cent and State Bank of India 1.39 per cent.
The BSE Bank index was trading with 3.20 per cent gain.
In a statement, the RBI said “heightened volatility in capital markets in reaction to COVID-19 has imposed liquidity strains on mutual funds (MFs), which have intensified in the wake of redemption pressures related to closure of some debt MFs and potential contagious effects therefrom. The stress is, however, confined to the high-risk debt MF segment at this stage; the larger industry remains liquid.”
“With a view to easing liquidity pressures on MFs, it has been decided to open a special liquidity facility for mutual funds of Rs 50,000 crore,” it added.
Meanwhile, domestic stock exchanges were trading on a positive note with benchmark indices Sensex trading with 2.12 per cent up at 31,991.59.