Switching off the phone is the best strategy!

“I left for home at around 11:30 a.m., once I saw the markets were falling. It did not make sense to hang around because it was sheer madness what was happening in the markets,” said the head of an equity research firm who did not wish to be named.

Most stock researchers and analysts decided to return home early on Friday for fear of being the target of the ire and frustration of fund managers caught in the middle of a declining market. Many analysts said they switched off their cell phones during market hours, something they rarely do.

Shocked & relieved

Stocks crashed heavily on Friday in intra-day trade leaving behind a trail of some shocked, some relieved, but mostly exhausted market men. “Call it a late reaction or over-reaction, the market was expected to fall,” says the head of research of a broking firm.

Analysts say that while the trigger for the fall were the global negative cues, domestic issues have also been simmering for a while preparing the markets and the marketmen for the crash.

Over-reaction

However, what has surprised most people is the sharp reaction of investors. “Indian investors are over-reacting to the international news. Now that growth in the US and Europe is showing signs of a slowdown, money will find its way back into the Indian markets,” said Mr Kishor Ostwal, Chairman and Managing Director, CNI Research.

The sentiment was shared by many others who agreed the fall was a good opportunity to buy. “I would still continue to bet on the India growth story,” said Mr Motilal Oswal, Chairman and Managing Director, Motilal Oswal Financial Services.

Retail investors have not been participating for some time now, affecting business at brokerages. Many institutional arms of broking firms have also closed down. Alchemy, Tower, Indiabulls, Mata Securities, Networth Stock Broking and Khandwala are just some of those who have wound up their institutional businesses in the last one year.

No clear direction

However, one thing that most analysts agreed on was the lack of direction in the market. With interest rates and inflation on the rise, most fund managers are worried about stability in the market. Bringing down inflation should be the first priority, say market analysts.

“There is nothing happening in the market that will make us believe that the next week will be better than this one. Some clarity on the US economic growth is required,” said Mr Nirakar Pradhan, Chief Investment Officer, Future Generali LIC.

Sensex Syndrome

Also, analysts feel that too much importance is given to the indices, which further demotivates investors. “We call it the Sensex Syndrome. Investors often make decisions based on the movement of the Sensex which may not necessarily mirror the actual stock prices' movement. There is a disproportionate relationship between the stock prices and the Sensex,” said Mr Jagannadham Thunuguntla, Strategist and Head of Research, SMC Global Securities.

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