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May 08, 2024 03:16 PM IST
Shankar Sharma said there are stocks that would fall 90% when the market enters a bear phase as the shares of companies laden with excess capital may plummet.
Ace investor Shankar Sharma believes that the single biggest threat that India's stock markets face is overcapitalization driven by the greed of merchant bankers and operators. In a post on X (formerly Twitter), he wrote, “Single biggest threat to this Bull Market are greedy Merchant Bankers & Operators, exhorting foolish promoters to raise excess capital, permanently destroying balance sheets via over capitalisation."
A bird flies past a screen displaying the Sensex results on the facade of the Bombay Stock Exchange (BSE) building in Mumbai.(Reuters) These are the stocks that would fall 90% in the next bear market, he reiterated.
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He reiterated that these are the stocks that would fall 90% when the market enters a bear phase as the shares of companies laden with excess capital may plummet.
The remarks come as volatility has gripped Indian stocks owing to a multitude of factors- uncertainty surrounding national elections, persistent foreign selling, elevated valuations and mixed Q4 earnings.
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India's volatility index increased by as much as 7.7% to 18.32 and hit a 15-month high for the third session in a row today. Dr V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, "The India VIX has spiked 72% from the April lows, indicating that high volatility will persist for some more time. It is important to understand that VIX is based on Nifty index options prices."
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He added, “The spike in VIX is due to the rising volume of options trades. Many investors are buying put options to protect their portfolio in case of an unexpected election outcome.”
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