AHMEDABAD: Ten months after first bloodbath in January 2008 shook Dalal Street, bears returned on Monday with the same vigour, forcing investors to lose their courage and patience. As the Sensex cracked the psychological barrier of 12,000, many traders and investors chose to forgo their positions and incur losses.

With the market becoming directionless, many position traders who were not willing to square off their positions, were compelled to do so even at the cost of incurring losses. For the brokers too, the situation became grim. Though the situation was not as bad as in January, the risk managers at brokers’ offices were busy giving margin calls to their clients.

Monday saw many heavy-weight scrips shedding flab and causing heavy losses to retail investors. The BSE Sensex has lost 3,800 points during the past 40 trading sessions. This is the second-biggest crash after the 5,000-point dip during January.

During the day, the Sensex once dived below the 11,800 level and touched 11,733 while the Nifty index went below 3,600. The investors have had to suffer a loss of over Rs 36,00,000 crore during the current calendar year.

Heavy weights such as Reliance Industries has broken the Rs 1,700-level and touched a 52-week low of Rs 1,632. Similarly, Tata Steel touched Rs 338.60, its lowest in the last 52 weeks. Real estate giant DLF reached an all-time low of Rs 298 while RComm too was quoted at Rs 300.
Says Anagram Securities research analyst Devarsh Vakil: “On Monday, investors lost their courage. The crashing of Sensex to a level below 12,500, considered a strong support base, led to an all-round scare in the market. The market declined throughout the day and with it those who had taken positions started losing patience.

Those who were not willing to accept bearishness in the market had to become realistic on Monday. Since there was no clarity with regard to the future direction of the market, many traders had to leave their positions and incur losses.”

“For those who had bought shares at higher prices in January, Monday proved very depressive as prices plummeted, shrinking the value of their portfolios,” he added.

For the brokers the situation was worse. Already worried by the low volume of trade since last many months, the Monday crash added to their woes. The prevailing gloom among their clients is what is worrying the brokers. Says Sourin Shah of Sourin Shah Financial: “We are compelled to think twice before calling the clients.

We are not in a position to recommend any share to the clients despite the fact that prices of several shares appear attractive. Those who had picked up courage after the January crash are losing their patience. Those who had bought blue chip shares to average out have also incurred further losses.”

However, there were also those retail investors who made inquiries to buy shares at the prevailing low prices. Says KIFS Security’s research head Yamal Vyas: “There is a small section of retail investors which has liquidity and which is exploring the possibility of buying shares.

However, we have not advised them to invest big. However, there is every possibility of a rapid correction in the market because the market is now over-sold.”

Source: Economictimes

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