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The Rediff Money Interview/ Vallabh Bhanshali

'People are drunk on the market'

For more than a week now, Dalal Street has been agog with speculation about a confrontation between the supernovas of the Bombay Stock Exchange -- Ketan Parekh of NH Securities and the Enam duo, Nemish Shah and Vallabh Bhanshali.

The buzz is that the latter sold shares short -- selling shares without owning them -- in scrips like Satyam Computers and Himachal Futuristic. This, so goes stockmarket scuttlebutt, led to an engagement with Parekh.

In an exclusive interview -- his first since the controversy began -- to rediff.com, investment banker Vallabh Bhanshali speaks out.

How true is this talk on the street of a duel between Nemish Shah and you on one side and Ketan Parekh on the other?

In two words, completely untrue. Enam as a company is not involved in speculation. Yes, individually, Nemish and I are both investors.

Were you on the short side in any counter?

Not at all.

How did the rumours spread?

No idea. But people have been believing all kind of sources. But how well do these sources know us? Are they our brokers or family members or even employees? This entire thing is plain dumb. It's the networking principle by which a rumour goes from round and round and comes back to the same person.

How, then, do you attribute the current collapse on the BSE?

I have been saying this for the past six months at various fora that people are not acting in a sane manner. My concern is what will happen to liquidity and the state of the mind. This is March-end and there would be liquidity problems. Also, people have made a lot of money this year so there will be taxes to be paid. Mutual fund net asset values are dropping and I believe that flows have also slowed down. The NASDAQ Composite Index has also been dropping in the last few days. So it is a culmination of all these factors.

As far as the state of the mind is concerned, I feel that unconvinced buyers cause unpredictable volatility. Now it is the real world companies and a few weeks back it was the virtual world that had attracted investor attention. There is no conviction in the market and people are drunk on the market.

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