New Delhi, Apr 24 (PTI) Finance and bank stocks tumbled up to 17.8 per cent on Friday after Franklin Templeton MF suddenly closed some debt fund schemes.

"The bears took grip over the Indian markets after two days of rebound. The benchmark indices opened gap down and traded with negative bias after Franklin Templeton - US-based fund house decided to shut its six India funds over liquidity crisis," said Ajit Mishra, VP - Research, Religare Broking.

The biggest drag in the Sensex pack was bank and finance stocks, led by Bajaj Finance which was the worst hit among the 30-share components, falling 9.14 per cent, followed by IndusInd Bank (6.58 per cent), Axis Bank (5.96 per cent), ICICI Bank (5.09 per cent) and HDFC (5 per cent).

Shares of Nippon Life India Asset Management cracked 17.82 per cent, Cholamandalam Investment and Finance Company plunged 12.51 per cent, UCO Bank 9.89 per cent, Mahindra & Mahindra Financial Services 9.82 per cent, LIC Housing Finance 9.12 per cent, Ujjivan Financial Services 8.73 per cent and HDFC Asset Management Company plummeted 6.38 per cent.

Led by the drop in shares of these companies, the BSE finance index fell 3.91 per cent.

From the bank index, Federal Bank dropped 4.12 per cent, State Bank of India 3.80 per cent, City Union Bank declined 2.79 per cent, HDFC Bank 1.79 per cent and Kotak Mahindra Bank 0.77 per cent.

The BSE bank index fell 3.30 per cent.

The 30-share BSE Sensex settled 535.86 points or 1.68 per cent down at 31,327.22.

Franklin Templeton Mutual Fund late on Thursday announced winding up of six debt schemes, with assets under management of over Rs 25,000 crore, due to redemption pressures and lack of liquidity in bond markets amid the COVID-19 crisis.

"...winding up of a few debt schemes by a large fund house in India added to the selling pressure witnessed in Banks and NBFC stocks," S Ranganathan, Head of Research, LKP Securities said.

"On the domestic front, Franklin Templeton Mutual Fund announced winding up of six debt schemes due to redemption pressure and lack of liquidity in bond markets amid the COVID-19 crisis, which added to the selling pressure," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.

This is the first instance when a fund house is shutting its schemes because of coronavirus related pandemic.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)