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Long story short: More pain ahead in midcaps, smallcaps, says veteran trader Sharad Shah

Celebrated short-seller and permabear Sharad Shah says there is still plenty of room for downside

May 13, 2022 / 11:40 AM IST
Sharad Shah

Sharad Shah

Sharad Shah is a rare or perhaps near extinct species in the Indian stock market: the permabear. And unlike most traders of his vintage, he makes no bones about his market strategy, short selling stocks. A stock market player for nearly 40 years now, Shah is considered something of a maverick by those who know him. Many of his contemporaries find him too outspoken and even loud, but Shah is not the one to mince words.

His trading style, or rather his investment ideology, if one can call it that, has landed Shah in trouble quite a few times in the past. Angry promoters have complained about him to the regulator, to investigative agencies, to the cops. Some threatened him with violence for short selling their stocks, and a few others even made good on their word. Not that it made any difference to Shah’s worldview of the stock market. With shares now in a freefall, Shah feels his theory has been vindicated, and it is payback time. Benchmark indices are down close to 15 percent from their record highs seen in October last year, and Shah feels there is still plenty of room on the downside. He is particularly bearish on midcaps and smallcaps, where he says the pain will be “unbelievable.”

Edited excerpts from a freewheeling chat:

In your previous interview in August 2020, you said you were extremely bearish on the market, and saw a crash coming. You have been downright wrong, considering where the indices are right now even after the recent correction...