Market goes into a tailspin: Here’s what Basant Maheshwari and Madhu Kela advise

NEW DELHI: The domestic equity had a heady fall on Friday as shares of select frontline banks and housing finance companies suffered heavy losses.

The trade on Friday was so volatile that BSE benchmark Sensex tanked and later recovered by over 800 points within a matter of minutes.

Market experts blamed higher crude oil prices, weakness in the rupee and bearish global cues for the market blues.


For immediate triggers, they blamed financial crises at IL&FS and sharp slide in YES Bank’s shares after the lender’s MD and CEO Rana Kapoor was denied extension by the Reserve Bank of India.

Here’s what market experts are advising as the stock benchmarks fell over 2,000 points in September alone:

Madhu Kela, Market Veteran
This looks like a technical selloff. A few NBFC companies have clarified that their short-term liquidity situation is very good and when I say short term, they said that for the next one year they have enough liquidity in the liquid accounts to match the liabilities.

This looks like speculative unwinding and for a long-term investor, if you really understand the company and if you have faith in the management, these are brilliant opportunities to buy these companies. Wherever the management is solid, they will be able to weather this storm and come out stronger.

Markets are more than discounting that and again remember this currency when in 2014 rupee was at 70. In 2017 it became 63 and from 63 it has gone to 72. So when you look at from 63, it looks like 12% depreciation but if I look at from 2014 level, we are up 3%, 4%.

Basant Maheshwari, Co-founder & Partner, Basant Maheshwari Wealth Advisers
The first thing about markets are prices, the second is earnings and all the fundamentals. So obviously when prices fall 50-55%, the first thing that we want to look for is if there is any big issue and if the issue is not that in print, then normally it is a knee-jerk reaction.

If you have good companies, you cannot be a prisoner of prices. In the NBFC business it is always said that you have to stay with the best. If you have been buying good quality names, they have come down and you can buy more. But people like us are already invested. There is nothing more to put in. But then, it is all fine.

Once you have the October results, the good ones are going to recover and it is as simple as that. Meanwhile, the price on the screen scares you and it scares me.