Shares of debt-laden companies on Thursday fell, dragging banks on fears of their possible exposure to these companies. The selling pressure was also due to corporate credit rating downgrades and recent resignations by auditors of several companies.

Debt-heavy stocks such as Jet Airways India Ltd slumped 15% after National Stock Exchange of India (NSE) said on Wednesday it will remove the company from daily trading of futures and options, effective 28 June, citing the embattled carrier’s failure to respond to queries about persisting rumours in the market.

Shares of Sintex Industries fell 10%, Sintex Plasitcs Technology slumped 10%, Reliance Power tanked 6%, and Reliance Capital declined 5%. Khadim India, Manpasand Beverage, Eros Media, Radico Khaitan Ltd, Reliance Capital fell 5% each, while Reliance Infrastructure declined 3%.

Bank stocks tumbled along with these companies. Punjab National Bank declined 5%, Union Bank of India fell 3.3%, Oriental Bank of Commerce lost 3.2%, Central Bank of India eased 3%, Bank of India fell 2.7%, Indian Bank was down 2.5%, and Canara Bank declined 2.3%.

Among private sector banks, Yes Bank slumped 9%, Indusind Bank fell 5.4%, IDFC Bank declined 2%, and DCB Bank and RBL Bank fell 1.7% each.

On Wednesday, Sintex Industries said it has defaulted on non-convertible debentures (NCD) worth 86 crores, a day after a rating downgrade by CARE Ratings. In March, cash-strapped Jet Airways defaulted on foreign loan repayment due to liquidity crunch.

Recently, mortgage lender Dewan Housing Finance Corp Ltd’s debt securities ratings was lowered to default. Credit rating companies also cut the credit worthiness of the entertainment firm Eros International Media Ltd.

On 12 June, Price Waterhouse & Co had informed the ministry of corporate affairs about certain alleged irregularities in the books of accounts of Reliance Capital (RCap) and Reliance Home Finance.

Deloitte Haskin and Sells resigned as auditor of Manpasand Beverages last year due to lack of cooperation from the company in sharing documents to support costs, revenues and capital expenditure.

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