'Portfolios will bleed too': What Deepak Shenoy said on blood on Street & stock allocation

Deepak Shenoy, CEO at Capitalmind Mutual Fund, on Monday called the ongoing selloff in the stock market a “man-made disaster” and said it could be a good opportunity to buy quality names. While he felt it is difficult to call a bottom as key indices are quoting just 10 per cent below their record levels, the market veteran said diversification may help cushion the magnitude of the fall.

Shenoy said the market drops provide opportunities and any lumpsum investing should be spread over three months to a year. Shenoy said things are going to look bad and one should brace for it. Where opportunities rise, because of panic selling, one might be better off on the buying side, he said.

"It's too early to say it's over, since we are just about 10% below all time highs on the Nifty 500 and we have seen more. But the 10% drop is usually a good point to start looking at measured allocations going forward. A lot of cash has been on the sidelines, and if you have a 3+ year view, it does make sense to consider allocating cash," he said. 

Diversification will help only to reduce the magnitude of a fall. It however should help investors remain less fearful, Shenoy said. 

His comments came as the NSE benchmark Nifty plunged 2.4 per cent to trade below 23,900 level in Monday's trade. The BSE barometer Sensex fell about 1,800 points and was quoting at 77,141.75.

"You might say we managers talk our book, but I can't see anything good coming out of a "sell now, you can buy back later" - mostly because in my experience, when it sounds like that is the best option, it's usually the worst option in hindsight later," he said. 

"It's a period when the red in your portfolios will turn out to be an opportunity, not a permanent colour," he wrote in an X note.  

Shenoy said man-made disasters tend to take a little longer, but history suggests the market has emerged eventually out of them better.