Following the 55%-plunge in DHFL share price, biggest since listing, Kapil Wadhawan, CMD, DHFL said to CNBC TV18 that it is a big surprise and shock to him. We are sitting in a strong liquidity position and there is not default whatsoever, Wadhawan said. All this what we are seeing is a "panic-stricken market reaction" and the total liability position till 31 March 2018 was just Rs 4,800 crore, Wadhawan said further to CNBC TV18. At the same time, there is close to Rs 10,000 crore of liquidity available with us in the system other than collections that we accrue on a monthly basis, Wadhawan said. NPA position is strong and the asset quality is top notch, Wadhawan added. 

Stock valuations aren’t extended and can support higher bond yields (the spread between the forward earnings yields and 10-Year Treasury yield is roughly 300 basis points, far above its long-term average). GDP growth is below trend, and every recession since 1970 has been preceded by above-trend GDP growth (GDP has followed a nice trend since World War II, and we are well below that trend currently due to a slow recovery from a big 2008 wipe-out). Debt levels remain reasonable and in line with long-term averages (net corporate debt to GDP is well off record highs, and simply in line with its long-term average).
Shortly after the crash, the Federal Reserve decided to intervene to prevent an even greater crisis. Short-term interest rates were instantly lowered to prevent a recession and banking crisis. Remarkably, the markets recovered fairly quickly from the worst one day stock market crash. Unlike after the stock market crash of 1929, the stock market quickly embarked on a bull run after the October crash. The post-crash bull market was driven by companies that bought back their stocks that that the considered to be undervalued after the market meltdown. Another reason why stocks continued to rise after the crash was that the Japanese economy and stock market was embarking on its own massive bull market, which helped to pull the U.S. stock market to previously-unforeseen heights. After the 1987 stock market crash, as system of circuit breakers were put into place to electronically halt stocks from trading if they plummet too quickly.
The panic began again on Black Monday (October 28), with the market closing down 12.8 percent. On Black Tuesday (October 29) more than 16 million shares were traded. The Dow Jones Industrial Average lost another 12 percent and closed at 198—a drop of 183 points in less than two months. Prime securities tumbled like the issues of bogus gold mines. General Electric fell from 396 on September 3 to 210 on October 29. American Telephone and Telegraph dropped 100 points. DuPont fell from a summer high of 217 to 80, United States Steel from 261 to 166, Delaware and Hudson from 224 to 141, and Radio Corporation of America (RCA) common stock from 505 to 26. Political and financial leaders at first affected to treat the matter as a mere spasm in the market, vying with one another in reassuring statements. President Hoover and Treasury Secretary Andrew W. Mellon led the way with optimistic predictions that business was “fundamentally sound” and that a great revival of prosperity was “just around the corner.” Although the Dow Jones Industrial Average nearly reached the 300 mark again in 1930, it sank rapidly in May 1930. Another 20 years would pass before the Dow average regained enough momentum to surpass the 200-point level.
You Marxist piece of shit. What the hell do you think the entire banking industry is based on. Should we throw our money at each other, hoping someone else reciprocates so we don’t have to eat discarded baby fetus? Interest is necessary to compensate for risk, which you would have known if you took your head out of Hegel’s ass and learned some basic financial theory. These subprime loans were the riskiest fucking things on the market, but they were rated AAA. Don’t fucking crucify bankers for being goddamn rational human beings while you complain about society passing you goodbye. Get off the fucking Communist high road and realize some shit about the world and how it works.
As a case in point, I present to you subprime auto loans, or loans given to consumers with less-than-prime credit scores (usually 550 to 619 on the FICO score scale). Having a lower credit score typically gives these folks fewer lending options, which allows lenders that are willing to work with subprime consumers to charge a notably higher interest rate, relative to prime-rated consumers. The problem is these consumers usually have subpar credit scores for a reason, and delinquency rates on these subprime and deep subprime loans are shooting higher.
1986 and 1987 were banner years for the stock market. These years were an extension of an extremely powerful bull market that had started in the summer of 1982. This bull market had been fueled by low interest rates, hostile takeovers, leveraged buyouts and merger mania. Many companies were scrambling to raise capital to buy each other out. The business philosophy of the time was that companies could grow exponentially simply by constantly acquiring other companies. In a leveraged buyout, a company would raise a massive amount of capital by selling junk bonds to the public. Junk bonds are bonds that pay high interest rates due to their high risk of default. The capital raised through selling junk bonds would go toward the purchase of the desired company. IPOs were also becoming a commonplace driver of market excitement. An IPO or Initial Public Offering is when a company issues stock to the public for the first time. “Microcomputers” now known as personal computers were become a fast growing industry. People started to view the personal computer as a revolutionary tool that would change our way of life, while creating wonderful business opportunities. The investing public eventually became caught up in a contagious euphoria that was similar to that of any other historic bubble and market crash. This euphoria made investors, as usual, believe that the stock market would “always go up.”
One of the big drivers of the stock market since 2008 has been monetary policy: in specific, the Quantitative Easing program of the Federal Reserve and the low interest rates. While the former put a lot of new money into bonds (keeping those interest rates low), the latter kept the world's least risky investment paying out very little. As a result, a lot of money chased better returns in the stock market.
In April 2015, Navinder Singh Sarao, a London-based point-and-click trader,[62] was arrested for his alleged role in the flash crash. According to criminal charges brought by the United States Department of Justice, Sarao allegedly used an automated program to generate large sell orders, pushing down prices, which he then cancelled to buy at the lower market prices. The Commodity Futures Trading Commission filed civil charges against Sarao.[63][64] In August 2015, Sarao was released on a £50,000 bail with a full extradition hearing scheduled for September with the US Department of Justice. Sarao and his company, Nav Sarao Futures Limited, allegedly made more than $40 million in profit from trading during the Flash Crash.[65]
In March 2017, William Poole, a senior fellow at the Cato Institute, warned of another subprime crisis. He warned that 35 percent of Fannie Mae's loans required mortgage insurance. That's about the level in 2006. In some ways, these loans are worse. Fannie and Freddie lowered their definition of subprime from 660 to 620. The banks are no longer calling borrowers with scores between 620 and 660 subprime. Poole was the head of the Federal Reserve Bank of Kansas who warned of the subprime crisis in 2005.
It was the most devastating stock market crash in the history of the United States, when taking into consideration the full extent and duration of its after effects.[1] The crash, which followed the London Stock Exchange's crash of September, signalled the beginning of the 12-year Great Depression that affected all Western industrialized countries.[2]
In April 2015, Navinder Singh Sarao, a London-based point-and-click trader,[62] was arrested for his alleged role in the flash crash. According to criminal charges brought by the United States Department of Justice, Sarao allegedly used an automated program to generate large sell orders, pushing down prices, which he then cancelled to buy at the lower market prices. The Commodity Futures Trading Commission filed civil charges against Sarao.[63][64] In August 2015, Sarao was released on a £50,000 bail with a full extradition hearing scheduled for September with the US Department of Justice. Sarao and his company, Nav Sarao Futures Limited, allegedly made more than $40 million in profit from trading during the Flash Crash.[65]
Rather than trying to time the market, which is incredibly hard to do and often counterproductive, it can be helpful to remember that the attractive long-term returns to the stock market include many market crashes. Depending on your measurement criteria, time-period and exactly what index you look at well-diversified portfolio have averaged returns of around 6%-10% a year over time.
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