Shares of non-banking financial companies (NBFCs) surged by up to 12 percent in trade on Wednesday as fears of liquidity crunch in the sector eased.

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Shares of Magma Fincorp jumped more than 12 percent to trade at Rs 115.80, while Edelweiss Finance gained 10 percent to trade at Rs 163.80.

Muthoot Finance, Shriram Transport, Bajaj Finance, M&M Financial, Dewan Housing Finance Ltd, Manappuram Finance, Equitas Capital, Muthoot Capital, Cholamandalam, REC, L&T Financial and Repco Home Finance all rose between 5 and 9.8 percent.

Shares of Bajaj Finance touched the day's high of Rs 2,248, rising nearly 8 percent in trade, although, the consumer finance company's shares still remains more than 26 percent lower from its 52-week high of Rs 2.994.

Bajaj Finserv surged 5 percent to trade at Rs 5,706, off from the day's high of Rs 5.731.95. The stock has fallen nearly 21 percent from its 52-week high price of Rs 7,200, hit on August 16 this year.

Shares of Shriram Transport Finance also spiked more than 8 percent to touch the day's high at Rs 1,053, which is still 398 percent lower from its 52-week high of Rs 1,668.75, hit on April 27, 2018. The stock had touched a 52-week low of Rs 902.3 on Monday.

HDFC traded at Rs 1734, up by 1.25 percent, while Indiabulls Housing Finance was also trading higher by over a percent at Rs 956.90.

Among financial sector stocks, the only laggard was IndoStar, which still trades weak by a percent, trading at Rs 282.

NBFC shares soared after the State Bank of India (SBI) on Tuesday said it will enlarge its purchase of loan portfolios from the sector to the tune of Rs 45,000 crore.

"It's a good commercial opportunity for the bank to increase the loan portfolio as NBFC assets are available at attractive rates," PTI quoted SBI managing director, PK Gupta, as saying on Tuesday.

Following SBI's decision, economic affairs secretary, Subhash Chandra Garg, also said in a tweet, that it should alleviate liquidity concerns of the NBFCs to a great extent.

NBFC shares have wilted due to heavy selling pressure after a series of loan defaults by IL&FS Group firms, since later September as investors raised concerns over the rising cost of borrowing them. As many as 32 stocks from the NBFC sector had hit fresh 52-weeks low on Monday alone.

Benchmark indexes gained on Wednesday, lifted by the sharp uptick in NBFC shares. At 10.46 AM, the BSE Sensex traded higher by 394 points or 1.15 percent, at 34,693. The broader NSE Nifty 50 also traded at 10,432.05, gaining 131 points or 1.27 percent.

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First Published:Oct 10, 2018 11:10 AM IST