Bajaj Finance shares surge as Nirmala Sitharaman’s cash injection for both NBFCs and small businesses will benefit Sanjiv Bajaj’s company

Bajaj Finance share priceBSE / Business Insider India / Flourish
  • FM Sitharaman announced a slew of measures, including a total liquidity infusion of ₹30,000 crore into non-banking finance companies.
  • As a result, the Bajaj Finance share price soared in early trade on Thursday, May 14, increasing by ₹90, up by nearly 5%.
The Bajaj Finance share price soared in early trading on Thursday, May 14, after the Indian government announced measures to inject liquidity in the non-banking financial companies (NBFC) sector. Shares of the company were trading at ₹2258 in early trading on Thursday, May 14, up by nearly 5% from the closing price on May 13.

“Strong set of fiscal measures announced by FM today covering many areas (details to be read). Particularly, this will help the MSME sector and smaller NBFCs that were asking for this,” said Bajaj Finance Vice Chairman Sanjiv Bajaj welcoming the announcements made on May 13.

On May 13, Finance Minister Nirmala Sitharaman announced a slew of measures as part of the first tranche of the Modi government’s Covid-19 stimulus package. Earlier this month, broking house Motilal Oswal had set a target price of ₹2,300 for the stock, and it is now less than ₹50 short of that.

Why is the Bajaj Finance stock soaring?

The Indian government has stepped in to offer some much-needed relief to the NBFC sector which is reeling under a liquidity crunch due to the shutdown.

FM Sitharaman also announced an additional liquidity infusion of ₹30,000 crore into NBFCs. Apart from this, the government will also expand an existing credit guarantee scheme that will bring benefits of ₹45,000 crore to the NBFC sector.

The Finance Minister revealed on May 13 that the government has sanctioned loans worth ₹77,383 crore between March 1 and May 4 to NBFCs and housing finance companies.

Further, SBI, the largest bank in India, has also decided to offer loan moratorium to NBFCs, which will help these companies preserve liquidity in the short term.

With the Indian economy shut down for nearly two months due to the coronavirus, there has been a severe liquidity crunch in all sectors. According to a CARE Ratings report dated April 17, the NBFC sector has been witnessing adverse impact of the lockdown in the personal loans and unsecured MSME loans segments due to layoffs, pay cuts and restricted demand.

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