Bloodbath of HFC's on bourses today

At 12.30 pm, the HFC's saw decline of more than 20% across the board. The pack was led by DHFL which corrected by more than 50% followed by YES bank which fell  by more than 25%. This was triggered after a comment by SBI Chairman, Rajnish Kumar that NBFC stock don't recover despite lower yields due to IL&FS impact.

There is general perception that the non recovery might be more steeper in NBFCs than we see the companies reporting. This can lead to opening of Pandora's box in the NBFC space. The companies like GRUH finance and Bajaj Finance which were trading at high P/Bs are to see higher correction. Also, this leads to opportunity for investors to buy best in class stocks at cheaper rates. We remain cautious on the sector and bullish on the market leaders.