| Company | Value | Change | %Change |
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Top performers in the mid-cap space
Among the top-performing stocks, Oracle Financial Services stands out with a 201% rise, reflecting a re-rating of the stock following a series of strong quarterly results.
BSE (Bombay Stock Exchange) also performed well, gaining 140%, while RVNL, the railway stock, rose by 135%.
Mid-cap Laggards: Impact of microfinance stress
In contrast, four of the top five mid-cap losers are from the banking and NBFC sectors.
Bandhan Bank, AU Small Finance Bank, IDFC First Bank, and Poonawalla Fincorp have seen declines of 34%, 30%, 29%, and 20%, respectively.
These stocks have been primarily affected by the rising stress in the microfinance sector, which has led to increased delinquencies and financial strain in rural portfolios.
A look at microfinance sector’s stress
The Reserve Bank of India’s (RBI) Financial Stability Report for the period of April to September 2024 highlighted a sharp rise in stress within the microfinance sector.
The share of stressed assets in the 31-180 days past due (DPD) category increased from 2.15% in March 2024 to 4.30% in September 2024.
This rise in non-performing loans, coupled with borrowers taking loans from multiple lenders, has contributed to growing financial instability within the sector.
Additionally, recent regulatory changes in the microfinance sector have compounded the challenges faced by these institutions.
These changes aim to reduce over-indebtedness but are anticipated to lead to increased delinquency rates. The impact could be significant, with loans worth approximately ₹1 lakh crore at risk across the sector.
The microfinance sector’s difficulties are further amplified by a tightening of access to bank funding. CARE Ratings has noted that many microfinance institutions are struggling to secure loans from banks, which could increase liquidity pressures.
(Edited by : Shoma Bhattacharjee)
