Impact of Govt. aid to PSU banks on NBFC sector

Recently, Government announced to infuse Rs 2.11 lakh crore into PSU banks. This lead to the big rally in PSU banks yesterday. What will be the impact of this on NBFCs sector?

Nothing. This is only related to the PSU banks.

All NBFC stocks reacted negatively to this announcement. Any reason for that?

Which are the NBFC stocks which reacted negatively to the announcement?

Manappuram Finance, CSL Finance and many others

Main reason for that was that investors were afraid that it might lead to some value migration from NBFCs to PSUs in investors porfolios. Nothing to worry about in the long term.

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Expectations of competition from the banks. Credit growth has been at an all-time low and with this move, credit growth led by banks is expected to bounce back. Check these two posts

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