Weak outlook for markets
As a result of massive falls in these stocks, leveraged long operators were caught on the wrong foot
The crash in mid-caps during February highlighted both the fragility as well as the strength of the Indian stock market. Many highly-fancied midcaps such as Opto Circuits, Core Education, Hind Oil Exploration, Educomp, etc., went into tailspins.
As a result of massive falls in these stocks, leveraged long operators were caught on the wrong foot. This led to margin calls, which couldn’t be met, followed by enforced sales that drove prices down further. The vicious cycle may still not have ended since several of these stocks recenly hit 52-week lows in the March settlement.
However, even though investors and traders suffered huge losses, the market for these scrips did not dry up. Liquidity was always available. At every stage of the fall, enforced sales found counter-parties willing to buy in the hopes of a recovery. This depth shows the market still has committed domestic players and that’s heartening, given that domestic retail and institutions alike have been net sellers for over a year.
For more visit: Business Standard
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