Shares of housing finance companies (HFCs) witnessed selling pressure on Tuesday, as SEBI capped the investment limit of mutual fund schemes in HFCs.
Among the housing finance companies, HDFC fell the least declining 0.74 per cent at ₹1,154.10 while Gruh Finance suffered the most crashing 5.4 per cent at ₹244.45.
Others such as LIC Housing Finance slipped 1.9 per cent, Repco Home Finance 2 per cent, CanFin Homes 2.9 per cent, Dewan Housing Finance 3.2 per cent and GIC Housing Finance edged down 3.4 per cent on the BSE. The Securities and Exchange Board of India on Monday reduced the additional exposure limit provided for MFs’ investment in debt instruments of HFCs within the finance sector to 5 per cent of the NAV of the scheme from the existing 10 per cent.
SEBI resort to this tightening exercise following the recent Amtek Auto fiasco, where JPMorgan Asset Management Company disallowed redemption by investors due to a payment default on its debentures by the auto parts maker.
Impact on fund-raising According to analysts, HFCs predominantly depend on debt market to raise funds to meet their capital requirements. “The SEBI move would impact the fund-raising capacities of housing finance companies in a big way,” said Ramesh Chordia, an independent analyst and share dealer.
This move will have a ripple effect on the real estate sector too, he added.
At a time when the Centre is concentrating on inclusive growth by schemes such as smart cities, AMRUT, and Pradhan Mantri Awas Yojna, among others, which would push the fund requirements of HFCs, the latest move could affect them financially, he added.
Big players safe However, this will not pose any major problem in fund raising for fundamentally strong players such as HDFC, Chordia said.
According to an analyst with a Mumbai-based broking firm, in the last couple of years HFCs have been raising funds through non-convertible debentures due to the cost advantage. But with interest rates starting to decline, HFCs may take that route too hereafter, he added.