The Hindu Business Line : Coimbatore investors bearish about recovery

STOCK market players in Coimbatore are sceptical of any near-term recovery in the capital markets after the Monday morning bloodbath as the loss incurred by the market operators is expected to be enormous and any large-scale default by market intermediaries would further depress the sentiments.

The developments in the last two trading sessions in the capital markets are also expected to have an impact on the primary market, which was showing signs of resurgence after a spate of successful IPOs like Biocon and divestment of PSU shares.

Speaking to Business Line here today, Mr D. Balasundaram, former President, Coimbatore Stock Exchange and Chairman, Coimbatore Capital (P) Ltd said his own company had to mobilise about Rs 7 crore to meet the margin requirements in both the cash and F and O segments in the NSE after the Friday's market crash. He expected the additional margin payment to be made due to today's crash in the region of about Rs 2 to 3 crore.

He said he believed that some brokers, who were not able to meet the margin payment requirements, had their terminals switched off though he had no specific information. He feared that the issue of meeting margin payment requirement would exert continuous selling pressure in the market from the brokers as well as investors since they will have to sell the shares even in a falling market that would keep the share prices depressed. It would also be crucial as to what position the FIIs adopt since the domestic political scenario would impact their decisions.

He felt that the market would probably look less negatively at the Communist parties joining the Government rather than supporting it from outside since they would be bound by the decisions the government takes if they shared power.

His advice to the investors was to keep off the market till the new government settled down and its policies were clearly outlined. Mr K. Annamalai, another former President of the CSX, feared that the loss for the broking community and the investors would be `enormous' in the market crash on Friday and Monday and it would take several weeks for the market to show some composure.

He said while the enormity of the fall was awesome, it was something waiting to happen because of not only domestic but also global developments like increase in oil prices, etc.

He said the investor confidence in the market has been shaken and he expected that at every small rise in share prices there would be large scale selling as investors scramble to minimise their overall loss.

Even long-term investors like mutual funds may resort to selling to meet redemption pressures. It would be a `salvage operation' for the investors and brokers who default in meeting margin money payments would have their terminals switched off. Overall, it was a bleak scenario for the market.

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