Even If IL&FS Group Brought This Correction, this is Right Time to Buy & Sit Tight! - Chart Of The Day 12 October 2018 - Equitymaster

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Even If IL&FS Group Brought This Correction, this is Right Time to Buy & Sit Tight!
Oct 12, 2018

All throughout history, every market correction has a compelling reason behind it.

While Indian markets were at their peak valuations and were vulnerable to corrections anyway, the blame this time is on IL&FS.

The complete collapse of IL&FS group will mean a huge default of Rs 910 billion. This is a big mess.

However, the government has taken over and new board is now in place. This is a bit of silver lining to this problem.

But guess what - there are way more cockroaches then initially thought.

As per IL&FS's annual report, there were group companies in the range of 176-251, however the new board has clarified that there are more than 340 group entities! That means more pain than anyone initially thought.

As the chart below shows, it is really the IL&FS group companies that are in a painful situation.

In fact, the new board believes the actual liabilities could be understated and has appointed the Serious Investigation Office (SFIO) for forensic audit. This will also help to identify if there was any fraud involved.

In the short-run, this event along with many other triggers have bought a lot of pain to the stock market.

But we at Smart Money Secrets believe, this is the right time to buy the best quality companies for the long-term.

Data Source: Financial Express

This Chart Of The Day was published in The 5 Minute WrapUp - Just Like Amazon and Flipkart, the Stock Market is Offering Great Deals... It's Time to Buy

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