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."
These are the stocks that would fall 90% in the next bear market, he reiterated.
Read more: Google Wallet app, now in India, isn’t bothered about credit cards or payments
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.
Read more: Economist Gautam Sen on inheritance tax: Unrealistic, will unleash economic chaos
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."
Read more: Nirmala Sitharaman rebuts Congress on PSUs, says they showed resurgence in Modi regime
{{/usCountry}}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."
Read more: Nirmala Sitharaman rebuts Congress on PSUs, says they showed resurgence in Modi regime
{{/usCountry}}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.”