Shockwaves rock Dalal Street after banking stocks crumple
Yesterday started as a normal day.
Veterans and novices gathered at Dalal Street early in the morning, ready for yet another day of profitable punting.
“Aaj solid profit hone wala hai,” Mukeshbhai told Jigneshbhai and the other punters gathered around Shyam’s Tea Stall, sipping Adrak Chai and munching Gutka.
However, unknown to anyone, some unscrupulous Bears spread the rumor that there was a run on Banks and that SBI, Yes Bank, RBL Bank and IndusInd Bank were going bankrupt.
The rumor gained credence because a junkyard Co-op Bank named PMC Bank has recently gone under, leaving its hapless depositors stranded.
Before anyone could gather their wits and make sense of the happenings, there was a massive sell-off.
RBL Bank, which was once touted as a potential 100-bagger stock, took it on the chin and sank like a stone.
And RBL drops 17% now
— Darshan Mehta (@darshanvmehta1) October 1, 2019
Other stocks like Yes Bank, Indiabulls Hsg Fin, IndusInd Bank, L&T FH also reported colossal losses.
What's Spooking RBL BANK 18% now
High Correlation in Stock Price Movements of
Indiabulls Hsg Fin
Not to paint all with the same brush, but there's just correlation in their movements.
Correlation, not causation.
— Mangalam Maloo (@blitzkreigm) October 1, 2019
— Darshan Mehta (@darshanvmehta1) October 1, 2019
Yes Bank Stock ended 23% lower today https://t.co/PNmVNhQakz
— Yatin Mota (@YatinMota) October 1, 2019
Thankfully, Sonia Shenoy and Shereen Bhan, the charming ladies of CNBC TV18, had the presence of mind to be proactive and come to the rescue of beleaguered investors.
Shereen Bhan rushed to the RBI and obtained a clarification that the rumors spread by the Bears are baseless and that there is no need to worry.
“Indian banking system is safe and stable and there is no need to panic,” she said in her usual cool and confident tone.
Sonia Shenoy similarly obtained a valuable clarification from RBL Bank that the Bank is “in very good shape” and that the sell-off is the result of “malicious speculation“.
No doubt, the efforts of the two ladies did calm nerves of the novices to a great extent.
RBI Statement:There are rumours in some locations about certain banks including cooperative banks, resulting in anxiety among the depositors. RBI would like to assure the general public that Indian banking system is safe and stable and there is no need to panic #Banks #RBI
— Shereen Bhan (@ShereenBhan) October 1, 2019
IMP CLARIFICATIONS FROM RBL BANK TO CNBC TV18
our exposure to ibulls group is just 0.25% of our book
entire exposure to HFCs and NBFCs is lowest in the industry
bank in very good shape
nothing has materially changed in the last 2 months
malicious speculation about bank underway
— Sonia Shenoy (@_soniashenoy) October 1, 2019
Nifty 13500 is coming … be ready for it
In sharp contrast to the scenes of chaos and pandemonium at Dalal Street, Atul Suri was the picture of calm and tranquility.
This is because he has trained under Rakesh Jhunjhunwala, the Badshah of Dalal Street, and learnt how to stay calm during periods of stress.
“Bulls are getting ready for the next big move …. We are going to head much higher, around 13,500 on the intermediate timeframe,” Suri said, looking the interviewer straight in the eye.
He pointed that the two major decisions of NAMO and Nirmala Sitharaman relating to slashing corporate tax rates and PSU divestment will provide the catalyst for the markets to surge upwards.
“The size and magnanimity of the move really brings that faith back,” he said with a big smile.
“What really changed is the sentiment. Last week the mood was bad. Now we are optimistic and we are invested in this market,” he added.
“We always heard that in Modi 2.0, there is going to be some big bang stuff together with this $5-trillion economy. It all seems like a pack of marketing gimmick. What really happened was the size and magnanimity of the move really brings that faith back and that is what gives the market another three-six months,” he continued, breathlessly.
Don’t fight with Modi. $5 Trillion economy is happening
Atul Suri is well aware of the fact that there are a number of skeptics on Dalal Street who believe that NAMO’s promise to convert India into a $5 Trillion economy is a mere “marketing gimmick” and nothing more.
He made it clear that he is not much impressed by the skeptics.
“The kind of statements you hear in the Prime Minister’s speech to the corporate bigwigs in the US in the last couple of days … you have to believe that this government has got its mind set on that $5 trillion number,” he stated.
“How they do it, whether it happens or not, only time will tell but yes the attempts are going to be there and then you do not want to mess around,” he added.
He also warned the skeptics that if they do not fall in line and stay invested, they will be trampled upon and miss out on the goodies.
“You do not fight the Fed, I do not think you want to fight Modi at the moment,” he said in a chilling tone.
Throw Junk stocks out of the window, buy quality stocks
Atul Suri came down heavily on the tendency of investors to buy junk stocks in the mistaken impression that they are cheaper than the quality stocks.
“The pain I have seen in people’s portfolios is so tremendous in that junk space where they are down 50, 60, 70% and I do not think money is going to come into that,” he said, his eyes filled with sadness.
The leadership for Nifty 13,500 will come from quality stocks, he said.
“Quality is what is really going to pan out and you are already seeing that when the fall happened. Portfolios are holding out because you are in quality and as and when the market reversed, the leadership that you found in this space was fantastic. So I personally think it is going to be quality driven,” he explained in a laborious manner.
SBI – 5.5%
Bajaj Finance – 1341%
Buying stocks of market leaders is mathematics.. buying the correct one is art https://t.co/Iqa2hvvXTC
— Niraj Shah (@_nirajshah) October 1, 2019
Specialty chemical & insurance stocks have value and growth
Atul Suri opined that the future belongs to specialty chemical and insurance stocks.
He pointed out that his portfolio is overweight both sectors.
“Even when the market was falling, they continued to make new highs. Even when the market is getting reversed, they still continue with their march,” he exclaimed, the joy evident in his voice.
Don’t wait for corrections, invest now
“Every day people wait for corrections but nobody invests in corrections,” Atul Suri rightly pointed out, bemoaning the tendency of novices of sitting on the fence and waiting for a correction to happen.
“You have to have the faith, you have to bite the bullet. You are not going to get a market correction. You are going to buy and the next day the market is going to go up? No, it is never going to be a perfect entry. You have to look at the larger picture,” he advised.
“It is about being invested and keeping a longer term faith on the trend,” he added.