Twenty-eight-year old Avani Gandhi and her stockbroker husband Bhavin are a young couple with no children who have zipped off on many an impulsive holiday in the three years that they have been married. When time permitted, they vacationed in Europe and Mauritius. And Goa was for quick getaways. Those holidays are now fond memories. “I don’t see them happening in the immediate future,” says Avani.
Like so many investors watching the stock market’s free fall, the Gandhis have had to rethink their budgets seriously. Eating out and entertaining lavishly are definitely on the decline. And this Diwali, there has been a marked reluctance to splurge, say a clutch of women stockbrokers, investors or housewives who have been affected by the plummeting Sensex.
Take Ila Dalal, a 49-year-old stockbroker from Mumbai. This Diwali, she pulled out a rarely-worn sari and jewellery from her cupboard to perform the ceremonial Laxmi pooja. “I bought gold earrings last Diwali but this year I did not buy even a silver ornament,” she says.
Austerity has hit the customary exchange of gifts as well: Dalal and her relatives did away with that tradition this year, and Avani admits that most gifts they got this year were boxes of sweets. “Gone is the expensive silverware that one received on Diwali. In fact, a silver shop owner told Bhavin that his business was down by 90 per cent down this Dhanteras,” she says.
For Dalal, another major deviation from the norm was that this year, she did not buy any stocks during the muhurat trading session of the Sensex. (The muhurat trading hour is on from 4.30 pm to 5.30 pm on the day of Diwali. It marks the beginning of the new accounting year and is considered auspicious.) Even though the stock market saw a 400-point lift during the muhurat trading hour this year, the mood was sombre.
“Last year, during muhurat trading, I had bought 100 shares of Reliance Capital at Rs 900 per share and sold them at Rs 1200. But this time, the margins (of gain) are so low — sometimes under a rupee — that there is no fun left in trading in scrips,” says Dalal
In Delhi, trader and homemaker Rekha Kakkar decided to escape the market mayhem by taking a holiday with her family in the fortnight prior to Diwali. “The money I’d set aside to trade during Diwali is fortunately saved,” she says. The day before Diwali, there was a huge fall of almost nine per cent. But Diwali itself was okay, and that was a huge relief,” says Kakkar.
Alpana Mashruwala, 60, who belongs to a family of stockbrokers in Mumbai, says long-term investors are biding their time. “We have been in the market for a very long time and have survived the stock market crash during the Harshad Mehta scam in the 1990s. We will just hold on to our investments till the market looks up,” she says.
For others like Debina Matthew in Delhi, who trades from home while holding a job as a personal assistant, this is a time to rethink her financial strategy. “I’m going to get back to a Systematic Investment Plan and play it safe,” she says.
Prudence suggests that you do not put all your eggs in one basket. But when the stock market was shooting up in 2007, many investors let caution fly out of the window. Mashruwala talks sombrely of a friend who had sold off a chunk of her jewellery to invest in the stock market. “She reasoned that the jewellery was just lying in the locker without earning any money. Today, with the Sensex under 10,000 points, she doesn’t know what to do.”
Avani has similar tales to tell. “Some of my relatives who had bought houses as investments are now thinking of renting them out or selling them. The value of most portfolios is down to less than half. And it is especially hurting those whose households were running on the interest earned on their portfolios.”
Long standing stockbrokers like Jayashree Dalal, 61, however, can take the stock market swings in their stride. “We can curtail our budget and live within our means but those who face the brunt are the young players who entered the market in the last three or four years. They have pretences to keep up. We have a saying in Gujarati, ‘Devu karine ghee pivaao’, which means such people will borrow money but continue to splurge.”
Unfortunately, for some investors, that saying has a cruel edge to it these days — many of them now have to borrow, not to splurge, but just to pay off their stock market debts.