The Telegraph
Since 1st March, 1999
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Retail rout in Tuesday trauma
Meltdown squeezes out small players

Mumbai, May 11: Small investors were in a stupor after a traumatic Tuesday left them with ripped pockets that saw shareholder wealth worth Rs 54,000 crore slip out.

“Let’s keep our fingers crossed. Let us all hope there’s stability in Delhi,” said Arun Kejriwal of Kejriwal Research and Investment Services, one of the many whose fortunes are twined to the poll-vaults on Raisina Hill.

Small investors, the most vulnerable lot in times of turbulence on the trading floor, have been advised to remain calm and stay out of the market for a couple of days.

What has also frayed nerves in the market is the fresh batch of Sebi figures that show foreign institutional investors (FIIs) turning sellers recently. They sucked out Rs 14.90 crore on Thursday, Rs 168 crore on Friday and an eye-popping Rs 595.20 crore on Monday.

That does not unsettle Kejriwal, though. “By not being a contrarian, they will be sitting on cash. They will re-enter the markets once the picture gets clearer.”

He has not doubts, however, that the current meltdown — the sensex slide today was the steepest in four years — should be enough to keep small investors out. “Don’t come back into the markets till you know which government we get. There is no way we can beat that.”

For investors like Kejriwal, the weakness in Asian stocks, the anticipated Chinese slowdown and the dollar resurgence are not the big factors buffeting local bourses. “There’s no bigger event than the political events closer at home. Other issues are less important.” Not many would agree that reasons for erosion in value of all stocks on Dalal Street by Rs 1,00,000 crore — to Rs 11,95,000 crore — lie beyond our shores.

A prominent fund manager advises the few intrepid small players eager to hang on, to hedge their bets by buying in regular instalments to average purchase prices.

Indices adrift

The sensex plumbed a trough of 5,309.42 today, its lowest in 2004, before ending 229.94 points down at 5,325.90. National Stock Exchange’s nifty shed 69.65 points at 1,699.45. Hindustan Petroleum lost 8.87 per cent at Rs 418.90, the share smothered by concerns that the new government will find it difficult to divest its stake in the firm.

Metal shares like Tata Steel were down 7.51 per cent to Rs 307.30 and Hindalco surrendered 3.69 per cent to Rs 992.50 amid concerns that a slowdown in Chinese demand may drag down global prices of commodities.

Other big names to have suffered were ITC, which lost 6.56 per cent at Rs 936.55 and Reliance Industries, whose share surrendered 5.66 per cent to close at Rs 489.75.

The Bharti stock was pounded 4.64 per cent to Rs 150.90 on fears that that the new government may not raise the foreign direct investment limit in the telecom sector to 74 per cent from 49 per cent, as proposed by the ruling NDA coalition.

The IDBI stock declined 11.21 per cent to Rs 47.15 slumped ahead of a meeting between domestic and international lenders of Dabhol Power Company in London on Wednesday to consider the size of losses to be shared.

Rupee slide

The rupee nose-dived to 45.42 against the dollar today, a 3-1/2-month closing low, on political uncertainty and rising strength of the greenback overseas. It tumbled 39 paise on Monday and 36 paise today.

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