The Hindu Business Line : Volatility is here to stay, investors too…

One expected to see scenes of traders holding their heads in their hands or pulling at their hair. But what one confronted was the exact opposite. Here is why. “We were expecting a 1,000-point fall, but markets opened with a gap of only 600 points. This is not surprising at all,” said a trader with a broking firm. Unlike the usual dilemma associated with a steep fall, retail investors did not panic, nor did brokers get calls from clients to sell their positions in haste.

The dealing room of a local broking firm was quiet, with occasional calls from clients and murmurs among traders that the market outlook was further bearish. “One should wait for further corrections and buy at cheaper levels as markets look bearish,” whispered one trader to another.

This reaction, said brokers, was a result of the ‘anticipated’ fall as the domestic markets had imitated global markets since the past few weeks. Also, brokers had advised their clients to wait and watch in such a situation. “No intra-day trading and lesser exposure to the derivative segment was the advice for retail investors,” said a broker.

In fact, references to the ‘sub-prime’ effect in the US market and its global links have become so routine at their work places, this reporter actually saw a dealer dozing off in mid-market hours, while the electronic media constantly beamed charts after charts of red arrows and downward pointing graphs.

‘No fresh positions’

“We have asked retail investors to not take fresh positions. However, we are encouraging long-term investors to buy at the current levels,” said Mr Nikhil Udani, Broker, Ajay Natavarlal Securities Pvt. Ltd. “If investors have bought stocks at higher levels earlier, we are asking them to continue buying more stocks at these levels and not sell,” he added.

Also, not many gloomy faces were visible as investors had already squared off their positions earlier this week, said Mr Udani.

Mr Sailesh Shah, Broker, Rapid Capital Services said some investors may have booked some losses currently and when markets fall further, they would buy stocks at lower levels.

“Pehle investors kharidkar bechte the aur ab bechkar khardine lage hain,” said a trader. (The trader said earlier investors would first buy and then sell but now the trend is sell first and buy later).

Traders’ outlook

“Our investors have become used to this volatility now and, hence, they are able to avoid the unnecessary losses,” said Mr Shah.

In fact, regardless of the amount of fall or gain in the market, the volumes stayed unperturbed. Long-term investors cashed on the opportunity while foreign investors booked profits, and the large volumes made sure the broker has a reason to smile.

Volatility is here to stay and investors are predicting the course of the domestic markets tracking the US markets close the previous day. Experience and similar triggers have helped them to be on the safer side of the pendulum.

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