The Hindu Business Line : ‘Like being caught in a bomb blast’

Chennai, Oct. 24 The carnage in the equity market left investors and traders in “a situation that you can’t even dream of in your worst nightmare. Today we got an idea what it is like to be caught in a bomb blast…. Just as you see those shell-shocked figures on TV, investors too felt the same way.” This is how Mr Sandeep Shenoy, principal strategist at PINC Research, sums up the trading day on Friday.

He added that investors in Mumbai were left dazed by “the ferocity and rapidity of the fall; it was like being caught in a quagmire where you can’t do anything except pray to god that let this get over and let me survive.”

Mr Nitin Shah, a Mumbai-based broker, said that business in most brokerages had come down by 60 to 70 per cent “as investors are totally scared and are just waiting in the sidelines.” It is as though they have been caught in a trap; “if they are invested, they cannot sell, if they have money, they cannot buy, because they don’t know where the bottom is.”

Mr Arun Kejriwal of KRIS, Mumbai, agrees. “There is just panic all around. Do you remember a day in the history of our stock market when Reliance Industries fell by 25 per cent in a single day? Volumes are not there; traders have lost money and even those who have money don’t want to buy today. If I am smart, or even semi-smart, I will just stand by and watch out for two consecutive days of rise before I put my money.”

Distress stories are floating around, but nobody could confirm that fresh claims of more suicides in Mumbai on Friday were true or not. But there were suggestions from brokers that in the F&O segment, SEBI should enforce much higher margins for those who want to sell.

And then there was the tale of a Delhi-based HNI investor who was advised by his financial consultant to come out of the equity market by selling his stocks in late February-early March, booking a loss of about 15 per cent.

With several crore rupees in hand, he entered the mutual fund market by investing in equity funds, Systematic Investment Plans and Fixed Maturity Plans. He has now lost more than half his money. What is worse, the few crores he had put into FMPs is also blocked “as two mutual funds have reportedly told him that he cannot withdraw more than Rs 1 lakh from each FMP a day.”

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