Settling mark-to-market margins in early trade is the key on Friday; weakness could spell more trouble.
Settling mark-to-market margins in early trade is the key on Friday; weakness could spell more trouble.
MUMBAI: When Dakshesh Shah sat on his terminal at 9.30 am on Thursday, little did he know the devastation that lay in store. And he was a goner the moment trading started.
The Vadodara-based trader, who works with Shah Investors’ Home Ltd, did what best he could do: Ease his pain by indulging in some deft downhill ride with A-group shares such as Reliance, Tata Steel and State Bank.
At the end of Thursday’s trade, Shah totted up a loss of Rs 60,000.
His friends weren’t half as lucky.
"They have, all put together, lost around Rs 20 lakh," he said.
That could very well be the story of a lot of day traders - who buy and sell stocks, some of them many times a day - for a living.
"Till about 2.00 pm, they were all banking on yet another bounceback. When that didn’t come about, the margin calls from brokers began. That’s when they fell into serious trouble - the last one hour of trade," said S Sunder, an Andheri-based sub-broker.
He believes their losses across the country would be running into crores.
What’s the way ahead now? "The crucial period for the market is till tomorrow noon. Traders get time till the next day afternoon as grace period for paying up mark to market margins. If the market does not bounce back a bit till then, we can expect another round of panic," Sunder said.
He says there are very few traders who have the capacity to short. "Most of them just watch the screen transfixed," says Sunder.
By nature, the day-trader’s first move is a buy. "But where they get caught is in the attempt to catch the bottom of the day. Today, there were many bottoms till 2 pm, then the bottom just gave away. It must have been painful to a lot of them," said an analyst.
But those who take contra positions in the market, or are deft at initiating stop-losses ease the blow. Like Vikas Kumar, a Mumbai-based lawyer and active day-trader.
"I had some contra positions in derivatives, where I made some gains. On a net basis, it was a heavy hit. One needs to be a market stud to emerge unscathed from what happened today," he said.
Thursday saw just 263 of the 2,550 Bombay Stock Exchange shares and 24 of the 939 National Stock Exchange scrips advancing.
The odds were clearly against the day trader.
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