Shares of two asset management company (AMC) fell 5.43% to 13.6% on fears of increased redemption pressure after Franklin Templeton Mutual Fund announced the winding up of six of its debt schemes.
HDFC Asset Management Company (down 5.43% to Rs 2449.85) and Nippon Life India Asset Management (down 13.6% to Rs 227.25) tumbled.
Meanwhile, the S&P BSE Sensex was down 516.18 points or 1.62% to 31,346.90.
The six yield-oriented schemes in which investments have been stopped from Thursday (23 April) include Franklin India Low Duration Fund, Dynamic Accrual Fund, Credit Risk Fund, Short Term Income Plan, Ultra Short Bond Fund and Income Opportunities Fund.
"There has been a dramatic and sustained fall in liquidity in certain segments of the corporate bonds market on account of the Covid-19 crisis and the resultant lock-down of the Indian economy which was necessary to address the same. At the same time, mutual funds, especially in the fixed income segment, are facing continuous and heightened redemptions," Franklin Templeton Mutual Fund said in statement issued late on Thursday.
The Trustees of Franklin Templeton Mutual Fund in India, after careful analysis and review of the recommendations submitted by Franklin Templeton Asset Management (India) (the AMC), and in close consultation with the investment team, are of the considered opinion that an event has occurred, which requires these schemes to be wound up and that this is the only viable option to preserve value for unitholders and to enable an orderly and equitable exit for all investors in these unprecedented circumstances.
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