The Hindu Business Line : Traders caught unawares; selling pressure wipes out values

Mumbai, Jan. 21 It was Black Monday for the markets with the Sensex crashing more than 2,000 points, its highest ever intra-day fall. They knew that a fall was round the corner but the extent of it completely floored them.

“We were expecting a correction between 800 to 1,000 points today, but nobody in the world would have expected a 2,000 point single-day fall. And there are no specific reasons why this happened,” said a very surprised Mr Sanjay Someshwar, sub-broker with Ventura Securities.

For share broking firms, it was a double whammy. The avalanche of selling pressure not only wiped out values in their proprietary positions but knocked off market capitalisation of their own stocks as well.

Cause for confusion

There was a lot of confusion prevailing at brokerages in town. “The BSE was shut twice today for about five minutes both before and after 3 p.m. At this time, the NSE was still open for trading and this disparity led to a lot of confusion here,” said Mr R. Balagopal, Senior Vice-President, Fedex Securities, even as he rubbed his eyes to ease the pressure from hours of looking at the computer monitor. They had a lot to contend with on this day. In the morning, investors had harsh words for them as they felt cheated at losing out on bargain basement prices that prevailed in the morning as sub-brokers saw their buying limits frozen by the trading members.

But the same investors would thank them later in the evening when they realised that the morning fall was only a precursor to what was to follow later in the afternoon. “By the end of the day we started getting messages from investors thanking us for selling their shares and also saying that it was the best thing to do. So by the end of the day the situation on the floor was getting more or less settled,” said a very relieved Mr Someshwar.

At four in the afternoon, the traders finally sat down for lunch, after the mayhem the market had wrought right through the day.

More Stories on : Stock Markets | Stock Markets

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page