NEW DELHI: Shares of asset management companies (AMCs) and other financial sector related firms zoomed as much as 13 per cent on Monday after the Reserve Bank of India announced a Rs 50,000 crore special liquidity facility for mutual funds.
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.
Other financial stocks also witnessed demand, with ICICI Prudential Life Insurance Company rising 11 per cent, Manappuram Finance 9.99 per cent, Aditya Birla Capital 7.75 per cent, Mahindra & Mahindra Financial Services 6.47 per cent, HDFC Life Insurance Company 6.64 per cent.
The BSE Finance index was trading 2.89 per cent higher during morning trade. Kotak Mahindra Bank gained 6.78 per cent, Axis Bank rose by 6 per cent, ICICI Bank 3.64 per cent, HDFC Bank 2.12 per cent and State Bank of India 2.11 per cent.
The BSE Bank index was trading with 2.92 per cent gain. In a statement, the central bank 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 and the larger industry remains liquid, it said.
"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 said.
Meanwhile, domestic stock exchanges were trading on a positive note with benchmark indices Sensex trading with 691.95 points up at 32,019.17.