“If you won’t take, I’ll pay cash,” begged small investor Mahesh Bhatt. He wanted to buy Reliance Natural Resources and L&T shares. But there were no brokers willing to put his orders through.
Dalal Street had shut down.
Investors had lost over Rs 6.5 lakh crore within sixty seconds of the market opening shop on Tuesday. Pre-market sell orders had sent the benchmark BSE Sensex plunging by over 11 per cent, triggering the circuit filter, the exchange’s safety fuse.
All trade halted and the system automatically locked all broker terminals. Within seconds, the National Stock Exchange had also hit circuit freeze, as Nifty fell 12.10 per cent to 4578.35 points.
Sensex: Biggest falls
1. Jan 21, 2008 --- 1,408.35 points
Finance Minister P Chidambaram's appeal for calm from Delhi and his reassssurance about the health of the Indian economy helped markets recover when the circuit freeze lifted at 10.57 am. But it was short-lived, as the Sensex dipped to the day's low of 15,332.42 by 11.53 am. “The pain should last one more day and loss of may be another 1,000 points. Then it should stablise,” said R. Venkataraman, Executive Director, India Infoline.
After the storm came some balm. US Federal Reserve chief Ben Bernanke cut key lending rates by 0.75 per cent before US markets opened. London’s FTSE Index, which was already trading, immediately jumped 3.5 per cent after the announcement. New York Stock Exchange’s Dow Jones index, which opened after the rate cut, lost 457.9 points, only to claw back.
Hopes have revived for Dalal Street.
The session after the circuit freeze saw lot of institutional buying. Sources say insurance companies bought heavily and Life Insurance Corporation alone is supposed to have bought stocks worth Rs 650 crore. Domestic institutions bought net stocks worth Rs 2778.71 crore, while FIIs net sold 4265.19 crore.
As the markets moved from chaos to consolidation, retail investors and day traders were angry and frustrated. While many have lost money, others were out to buy today when many prime stocks were available at unbelievable prices.
Vishal Tulsyan, an avid chartist and investor since 1992, had his list ready – he wanted to buy GAIL at Rs 341 and Reliance Petroleum at Rs 108. By the end of the day GAIL was at Rs 408 and RPL at Rs 146.70.
But Tulsyan had not got any “Brokers refused to accept our orders. That loss of opportunity is the main loss you see on the Street today,” said an enraged Tulsyan. Angry retail investors alleged a ‘conspiracy’ to help foreign funds and institutions buy. “This is crazy. Investors should understand that most brokers had kept their terminals closed as they had to first ensure pay-in for tomorrow,” explains Anita Gandhi, Head of institutional business, Arihant Captial Markets.
Most broker were only squaring up their positions on the derivatives side and not taking in fresh orders as they had to cover for the market to margin payments, confirm market participants. The drastic fall in daily volumes on NSE F&O segment from Rs 82241 cr on Monday to Rs 44307 cr on Tuesday is an indicator of that. On cash side brokers allowed purchases only if cash was available on the client account. “There were no sellers. After a 4000 point loss everyone is buying,” said a broker.
It was that kind of a day.