oppn parties Did You Lose Money in Stocks Last Week?

News Snippets

  • After both candidates got 34 votes in HP. Congress' Abhishek Singhvi lost in the draw of lots as the BJP candidate was declared winner
  • ED issues 8th summons to Delhi CM Arvind Kejriwal in the excise policy scam case
  • Prime Minister Modi introduced the three IAF group captains - Prashanth Nai, Ajit Kirshnan and Angad Pratap - and Wing Commander Shubhangshu Shukla, who have been shortlisted for the first manned space mission of ISRO
  • Centre appointed former SC judge A M Khanwilkar as the new Lokpal. It also named three judicial and three non-judicial members of the Lokpal panel
  • A 9-judge Supreme Court bench started hearings on whether states are entitled to tax mineral-rich land in their respective states
  • Taking note of the huge disparity in charges in government and private hospitals for most treatment procedures, the Supreme Court asked the Centre to strictly enforce the CGHS rates or warned that the court would have to step in
  • Calcutta HC ruled that regardless of a woman employee being regualr or on contract and whether her contract permitted maternity leave, employers cannot deny childbirth and maternity leave to any women employee as it 'seeks to create a class within a class which is not permissible'
  • Sebi asks MF companies to disclose more risks associated with their small and mid cap funds
  • Vodafone Idea board approves Rs 45000cr funding infusion
  • NCLT clears Hinduja acquisition of Reliance Capital at Rs 9650cr upfront payment within 90 days of approval of resolution plan
  • Stocks returned to winning ways on Tuesday: Sensex gained 305 points to 73095 and Nifty 76 points to 22198
  • Commonwealth Chess championships: Mitrabha Guha wins title by scoring 7.5 points in 9 rounds
  • WPL: RCB beat Gujarat Giants by 8 wickets
  • Bengal starts paying MNREGA workers out of own funds as Central disbursement is stopped due to alleged 'discrepancies' in accounts
  • ISC chemistry paper postponed to March 21 just hours before start of exam due to "unforeseen circumstances"
Cross-voting in Rajya Sabha elections enables BJP to snatch seats in UP & Himachal /////// Congress government in Himachal in trouble as some MLAs revolt
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Did You Lose Money in Stocks Last Week?

By Sunil Garodia
First publised on 2017-08-12 19:22:57

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.
The Indian stock markets were going strong – too strong, in fact – till the end of July. Suddenly, in five trading sessions between 7th and 11th August, the bubble burst. In these five days of mayhem on the bourses, the benchmark indices lost 3.5% and investor wealth worth Rs 6.4 lakh crore got wiped out.

Let’s take the indices as they existed at the end of trading on Friday, 4th of August. The Nifty stood at 10066.40 and the Sensex at 32325.41. There was a lot of cheering going on at the Nifty having scaled the 10000 peak and new records were being created every day. But the bulls had not reckoned with the bears.

Starting 7th of August, the bears took control in a spectacular manner. On 7th the trailer was shown with a flat Nifty just sliding 9 points. But subsequently, every passing day broke the back of the bulls and at the close of trading on Friday the 11th, the Nifty stood at 9710.80, a good 355 points or 3.5% lower in a week. The Sensex similarly slid to 31213.59, or down 3.44%.

What triggered this mayhem?

Analysts say that the markets were disappointed with the 0.25% rate cut by the RBI. They say that operators had already factored in this small cut and were looking forward to 0.5% as all indicators – set by the RBI itself, like the rate of inflation - were favourable for such a cut. Then, even as the rate cut “disappointment” was being played out in the markets, market regulator Sebi dropped a bombshell in the form of restricting trading in nearly 300 companies on account of their being identified as shell companies by the ministry of corporate affairs. Others talked about war fears, both between India and China over Doklam and the one that North Korea might trigger. Operators got confused, say the analysts.

So it means that rather than performance, quarterly results, orders won, favourable monsoon, favourable policy and other fundamental or technical factors, the Indian stock markets are largely driven by rumours and extraneous factors. Another important thing is that just a handful of operators and a couple of counters can make or break the day. There is an excess of everything. Take the case of Reliance Industries. The day Mukesh Ambani declared a 1:1 bonus, the stock was hovering around Rs 1500. It shot up to Rs 1664 and came back to Rs 1546 in the bloodbath week. It may sink lower next week. So is there any logic in this up and down, apart from the games being played by bulls and bears.

These are troubled times on the bourses. The small investor, if he has not already burnt his fingers, will be well advised to stay away from them for now. He must not pay heed to all the pleas from brokers that after the recent crash, some ‘gems’ are available at throwaway prices. The bottom of the market has not been seen yet and those who were yelling that Nifty will touch 20000 by 2020 are nowhere to be seen. Even if you catch them, they will say this is just a temporary phase. But a phase that wipes out Rs 6.4 lakh crore of investor wealth is not a joke. More than just demand and supply, something else is at work.