Mera to ek khokha gaya teen din mein. Nikal hi nahin paya, said PS, a big-time south Mumbai trader who lost Rs1 crore.
MUMBAI: “Mera to ek khokha gaya teen din mein. Nikal hi nahin paya...,” said PS, a big-time south Mumbai trader who lost Rs1 crore between last Wednesday and Friday.
PS got blitzed because he could not get out of his leveraged positions. His predicament is symptomatic of the carnage that took place on the stock market.
When the market falls with a huge “gap down”, or plunges at opening bell, exit becomes impossible.
The only option: take it on the chin. So, what do people like him do this Monday morning?
Sweat, for one. A lot. Because, a nervous undercurrent continues at brokerages due to the impending expiry of the May futures contracts on Thursday.
“What has surprised the street is the level of genuine selling — apart from the margin-call-spurred ones — seen across shares,” said one analyst who did not want to be named.
“In spite of this huge fall, if people are still willing to unload, it is not good.”
Finance Minister P Chidambaram’s dismissal of the Left’s comments on the markets has calmed some fears, but that is as far as things go.
“Basically it has become an issue of futures rollovers,” said S Asthana, a sub-broker. “If the fall continues after the rollovers, then we could have a significant problem.”
“This is a very tricky time for the markets,” said Vijay Bhambwani, technical analyst. “If the Nifty manages to stay above the 3174 level, the possibility of a pullback is bright. Else, there could be a decline to the 3045 level.”
Verily, Monday will be the day of reckoning.
Traders and investors who have not made good their mark-to-market margins will see their positions getting knocked off, which could lead to volatility.
“No one will be able to assess how much payments are outstanding,” Bhambwani said. “The first two hours of trade will reveal the picture. All the leveraged guys are still nursing hope - which is bad news for the market. Long positions are still outstanding, which is problematic.”
An analyst from a foreign brokerage said smarter money seems to have exited from long positions. “The retail guys are still nursing hopes, and these are the weakest hands in the market.”
In effect, the markets are in weak hands, which is not a good sign.
So, what should an investor do?
“Long-term investors can buy at declines if one has a 15-18-month timeframe in mind,” said Bhambwani.
Asthana said the speed at which the market falls will be more measured now. “People should refrain from buying till such time that a confirmed bottom is reached.”
Chartists are expecting a range-bound market. Their advice: play in a 50-point range on the Nifty futures, just to be on the safe side.
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