10 things stock markets fear most today: Clear and present danger
From FM Arun Jaitley, Reserve Bank of India, Securities and Exchange Board of India (SEBI) to even the State Bank of India chief Rajnish Kumar, the top honchos looking after the financial markets have sent out a warning that they are looking at the volatility in the markets and will step in when. and if. required. This follows immediately after the Sensex tanked as much as over 1200 pts on Friday even though it recovered thereafter. nevertheless, broader market concerns are being driven relentlessly. However, adding to the problem were debt markets, which too suffered a hit. The writing on the wall is clear, there is a clear and present danger and here we list 10 threats to the Indian economy:
1. Against the backdrop of debt defaults by diversified IL&FS group, there are also worries about non-banking financial companies. Reports of debt defaults by IL&FS also sparked concerns, which spilled over into other NBFC counters. Also, the credit markets are getting nervous in the wake of large value defaults as in case of IL&FS and tightening of credit support by some large lenders. SBI and LIC recently expressed apprehensions about supporting IL&FS. Image source: Reuters
2. Liquidity deficit has widened significantly, including due to recent interventions by RBI to contain sharp rupee depreciation. SBI chief has said there was no concern on liquidity of NBFCs in view of their liquid cash position as well as the availability of committed lines. Image source: Reuters
3. Negative reports about ICICI Bank and Yes Bank - their chief Chanda Kochhar and Rana Kapoor have been in the news for the wrong reasons. Image source: Reuters
4. Certain recent actions of regulatory and investigative agencies have restrained credit decisions after ongoing action against various bankers and even some regulatory officials. Image source: Reuters
5. Rumours are rife about government invoking a rarely used provision for forcing management change at crisis ridden systemically important entities. Image source: Reuters
6. Rupee has witnessed a massive plunge in the recent past due to rising trade and current account deficits in the wake of soaring crude oil prices. Image source: Reuters
7. Overseas investors have pulled out a massive Rs 15,365 crore (USD 2.1 billion) from the capital markets so far in September. Image source: Reuters
8. Dewan Housing Finance (DHFL) said it proposes to reduce exposure to commercial papers and increase hedging activity. This, days after DHFL shares plunged up to 42 per cent on massive selling off over fears of a liquidity crisis. Image source: company website
9. Fears voiced over inadequate liquidity to NBFCs, mutual funds and SMEs. Government has sought to reassure on this point and said it will ensure full liquidity though. Image source: PTI
10. Bankruptcy of large construction companies is likely to take a heavy toll on the economy. Among the top 4 are: Lanco Infratech, Era Infra, Gammon India and IVRCL. Image source: Reuters