Housing fin companies tank after Sebi tightens MF norms

Shares of housing finance companies saw some selling pressure and settled in the negative territory after Sebi slashed mutual funds investment limits in debt securities of housing finance companies.
The Sebi board yesterday approved amendment in Mutual Funds Regulations, 1996, which will reduce sector exposure limits of debt schemes to 25 per cent from the current 30 per cent.
In the case of housing finance companies, the cap is an additional 10 per cent. Now, the regulator has decided to slash this to 5 per cent.
Following this, shares of housing companies like HDFC, Dewan Housing, LIC Housing, GIC Housing and Can Fin Homes came under selling pressure.

At the end of today's trading session, the stock of HDFC quoted at Rs 1,154.10, down 0.74 per cent, while Dewan Housing and LIC Housing fell 3.22 per cent and 1.89 per cent, respectively.
Meanwhile, shares of GIC Housing settled the day at Rs 229, down 3.31 per cent, and Can Fin Homes was at Rs 1,003, down 3.24 per cent, on BSE.

Marketmen said this move by markets regulator Sebi is likely to impact housing finance companies as most of them depend heavily on bond markets to raise funds.
In a regulatory filing, HDFC today said that as per Sebi's data on deployment of debt funds monthly report for December 2015, the total debt assets under management of mutual funds stood at Rs 8,80,672 crore.

The exposure of mutual funds to NBFCs is Rs 1,31,391 crore, which constitutes 14.9 per cent of the AUM, it added.
HDFC further said the single sector exposure limit stipulated by Sebi for mutual funds is 30 per cent of the net asset value of a scheme for NBFCs (inclusive of 5 per cent for housing finance companies).
As of December 31, 2015, the total amount invested by mutual funds in non-convertible debentures and commercial paper issued by HDFC is 3.9 percent of the total debt AUM.
The single issuer limit stipulated by Sebi for mutual funds is 10 per cent of the net asset value of a scheme, the filing added.