A high caliber Investment Professional with an experience amounting over 30 years, majorly across various facets of Investment.
NPA in Indian System
What will Cause Collapse of Indian Economy
The rising stock market does not represent reality of India. The market is manipulated. Economy is stressed and can collapse.
Factors Responsible for Crash
Crash of Stock Market - Rising Interest Rates and Quantitative Tightening will be responsible for market crash. BSE Sensex will immediately down to 49000. Once it breaks this limit, the resistance is at 44000, it will break this Resistance to reach to bottom around 34,000
The crash will bring tremendous pressure on banking. Huge NPA is Banking will bring down the banking sector.
Increased Oil Prices, Commodities and Metal will be responsible for huge hole in Current Account and Fiscal Deficit. Government has reduced Taxes and Customs to imports, which will reduce government earning and slow down economy. This will increase pressure on Banking.
This will give rise to resentment among population. The increased poverty and hunger can cause collapse.
India at 101 in Hunger Index
India at 131 Human Development Index
Reduced Savings from 25% to 18% for Individuals and 30% to institutions which is below Bangladesh rates.
India's per capita Income is also below Bangladesh. This slowing growth and mismanagement of economy is responsible for collapse.
Hate will Bring Collapse
Crash of Bombay Stock Exchange Index
Far From Reality
Paytm the Biggest IPO of Tech Company is trading at 70% discounts, this indicates either Pricing is wrong or Market is Collapsing.
LIC IPO Pricing biggest scam. Who destroyed LIC value. Once best company, suddenly lost its value.
The report card of Indian IPO is extremely poor. Most of IPO's go burst and many companies go missing after IPO.
Reality of today's market is, The BSE Index is driven by Few Heavy Weight Companies. 80% of listed companies are trading at very low prices.
India's Growth is down and Economy is suffering with many Challenges.
Unemployment rate at 40 years high. Bottom-line is extremely bad. The market does not represent reality. India is categorized as poor country, underdeveloped country. India is no more developing country.
What will make India's Stock Market Crash
- Global Interest Rates
- Tightening by Fed and European Central Bank
- Depreciating Rupee
- Increasing Current Account Deficit
- Slowing Economy
- Energy Prices, Oil, Gas, Coal
Why Market Is Ready to Crash
Average Life of Big Bull in India is 9 Years. This is how the crash comes.
- Harshad Mehta Scandal - Once darling of market and market maker, arrested for fraud and with this came the crash.
- Ketal Parekh - The second crash came with arrest of Ketan Parekh.
- Waiting for Rakesh Jhunjhunwala Crash. There is need for investigation into his insider trading and corruption. If case is taken serious, outcome will be crash.
NSE CEO Scandal
- Former NSE CEO Chitra Ramakrishanan was arrested by CBI. Market has not taken this into account yet.
- Anand Subramanyam then COO officer was arrested for fraud and scam. These stories are hidden from investors and it will come out one day and market will crash.
India Market is Artificially High
The crash of Corona, thousands died, and economy stopped but market remain going up. The market does not represent reality of economy. Market is driven by few heavy weight of Index. This is reason market is prop-up artificially.
Even though India's Savings is going down. Per capita income is going down, and Debt is increasing, in this situation market is ready for crash.
Where is the Bottom
My Opinion BSE Sensex 24,000 is bottom.
Non Performing Assets
The Real Question is How Much is NPA?
Do anybody know? Do RBI know, how is hidden?
No stress tests, lax regulation and no real action, making India's Financial System vulnerable.It can collapse any time.
RBI relaxed reporting of NPA twice during the tenure of present RBI governor, Mr. Shaktikanta Das, who is brought in to implement Government Policy of Easy Money.
After collapse of ILFS and its restructuring, still no real action is taken on other similar companies.
Is NPA 21 lakh Crore Increase in last 8 Years?
Really no one knows, how much is NPA.
I can list few numbers
- Bank Frauds 5 lakh 38 thousand Crore
- Loan Write Down 8 lakh 75 thousand Crore
Mudra Loan - How much total loan is issued and how much is recovered. How NPA is calculated or not accounted at all. What is default rate. Total Mudra loan is 18.75 Lakh, these loans are given to Micro, and Small Business. These are small loans, default is very high. No one really knows how much provisions are taken. In my opinion 75% loans will default, so banks have huge NPA.
Construction Loan - Real Estate Loan - Housing Loan
These are three categories which will have maximum effect of slow down. Almost 100 Billion USD loan is given to Real Estate Companies. 18% is sever stress, 12% is stressed according to government data, which is a year most. These stressed are calculated according to relaxed norm.
The loans to construction sector, specially PPP Road Projects are under stressed. This is huge amount. There is not much Data on it is available. But looking at Road Projects, Power Projects and Infrastructure Projects carried out during all ten years, this number is very high. The projects are delayed, economy contracted severely during Covid and yet to recover. Economy will remain slow, very slow. This will have pressure of Projects. The cash flow will remain negative and within next two quarter they will be NPA.
What is The Size of NPA? This is real question.
India is one of Country where Individual Borrowers are not protected ? There is no Bankruptcy Protection for Individual Borrowers. There is no law which protects Individual Borrowers. Increased unemployment, job losses during last three years has created havoc among families. They have sold their Gold, Jewelry, and liquid assets to fulfill the obligations. This is huge numbers.
Savings is going down, it is reduced by almost 5%, this means common man is getting poor. Banks will not have enough cash to lend and this will slow down economy.
NPA of Manufacturing, Power and Industrial Sectors - This sector will have huge impact of slow down. The 1% slow down of economy will make at-least 12% debts NPA.
What is the Size of NPA?
If Stressed Test is Carried Out and the Standards defined by Ex RBI Governor is taken into Account, NPA is above 52 Lakh Crore, which is at least 3 times higher than projected.
Does Government has Capacity and Does RBI has tools to handle it. Not Really.
Balance of Payment and Rising Commodity Prices
Do You Remember the India has to Plane Load of Gold to UK to Barrow money, then PM, Mr. Chandra Shekhar has to take this painful decision.
Is India Near Another BoP Crisis?
Yes, India is fast approaching BoP Crisis.
Oil is above $100 a Barrel for more than 3 months now. The prices were above $80 for almost six months. The prices will remain in high for coming months, war is just started and there is no indicator that it is going to stop any time soon.
Anything above $70 a barrel is more than enough to derail India's BoP. Oil Prices may not be only thing responsible for this situation.
Commodity Prices - India is net importer of Edible Oil and other Grains and Animal Feed. The rise of prices will bring stress on Indian Rupee and increase inflation.
The metal is another commodity is giving India hard time, it will bring slow down to economy.
India is Facing multiple Stress on Rupee.
Rising interest rate and Quantitative Tightening by Fed will bring nightmare for Indian Market. Slowing Global Economy, reduced Export and Increased Imports will definitely has big Challenge for Indian Economy.
Reduced Savings - Saving is Reduced to 30% which is lowest in last 15 years and household savings is down from 23% in 2012 to 18% in 2022. This is big Fall. This is indicator of another things, banks does not have enough money lend, they will have less money to lend. Specially Individual savings are down by 5% means cost of living is very high, and common man can't save and many of them used gold and jewelry to survive.
The slowdown in Global Economy
Slowing down of Global Economy and High Input Prices will increase stress in Indian Economy. The Dollar Debt will face huge repayment challenge. The market will face real challenge when no investment will dry up.
Energy Crisis, no electricity, coal crisis and commodities, these all are cocktail which is not easy for India to handle.
Stress is already in system, NPA rising and RBI does not have tools to handle it.
India can Face Default on its Repayment of Dollar Debt.
India's Banking Sector is very stressed and vulnerable. It is nightmare for banking. Banks are closing branches, reducing staff to keep going, reduced cost. Because savings are low, so lending will be low, and high default, all this can bring Banking sector to knees.
Central Bank of India will close 600 Branches
The Merger of HDFC Bank and HDFC Housing Finance - This to reduce cost. Because assets are stressed.
The real problem is no one want to talk truth and take actions.
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