oppn parties Did You Lose Money in Stocks Last Week?

News Snippets

  • In a first, the Supreme Court recognizes marital rape, although for the limited purpose of allowing married women the right of abortion up to 24 weeks if they conceived as a result of forced sex by their husbands
  • Air India cuts discounts on base fare to students and senior citizens from 50% to 25%
  • Mallikarjun Kharge and Digvijay Singh are being touted as frontrunners to take on Shashi Tharoor in the elections for the post of Congress president
  • Sonia Gandhi will decide who will be Rajasthan CM if she feels there is a need to change guard after the near-rebellion by MLAs in the state
  • Ashok Gehlot bowed out of the race for being Congress president after meeting Sonia Gandhi
  • India has moved to the 40th spot in the innovation index, up 6 spots from last year
  • DGGI has alleged that top insurance companies, banks and NBFCs has committed a fraud of Rs 800cr by claiming input tax credit without underlying supplies
  • The Centre will borrow Rs 10000cr less than planned earlier due to good revenue collections
  • At $23.9bn, India's current account deficit widened to 2.8% in Q1, the worst in four years
  • Stocks continue to flounder on Thursday: Sensex sheds 188 points to 56409 and Nifty 40 points to 16818
  • The 36th National Games were declared open on Thusrday by PM Modi in front of a record crowd in Motera near Ahmedabad
  • Jasprit Bumrah most likely to miss T20 World Cup due to recurrence of back injury
  • PFI's political wing, the SDPI is on EC radar and action will follow soon if discrepancies are detected
  • Ashok Gehlot to meet Sonia Gandhi today, says all issues will be sorted out soon
  • Referring to the PFI ban, most Muslim organizations ask the government to take similar action against right wings organizations like the RSS, Bajrang Dal, VHP and the like
In a landmark order, Supreme Court rules that all women, married or unmarried, are entitled to safe and legal abortion up to 24 weeks of pregnancy as per the MTP Act
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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.