Stock Market Crash - What Next?

As the market bleeds, options are limited for the spooked investor

- Yagnesh Kansara in Mumbai

Acouple of listed stocks tell the story of the mayhem in the Indian stock market, currently in the grip of a global pandemic. Last October, the IPO of the state-owned monopoly, Indian Railway Catering and Tourism Corporation (IRCTC), listed at twice its offer price of Rs 320. By February-end 2020, it peaked to almost Rs 2,000. But by March 17, it tumbled nearly 50 per cent. Recently, investors expected SBI Cards and Payment Services to list at a premium to its offer price of Rs 750. It didn’t. On March 16, it closed its first day with a loss of 9 per cent.

This is true for most global stock markets. The average fall in each is within the 25-30 per cent range in the past few weeks. The same is the case with the Sensex, which fell from a peak of 42,000 points this January 17 to below 32,000 in three months. In the past two weeks, the New York Stock Exchange halted trading on several occasions. It witnessed the largest single-day fall during this period. A daily fall of 2,000-3,000 points in several global indices seems a routine affair. The regulators have no clue about what to do.

This spooked investors like this South Mumbai-based active trader who doesn’t wish to be identified. In the past few years, his portfolio showed sizeable gains. But due to the current hyper volatility, over the past 15 trading sessions (until March 16), the tide has turned for him. He is on the verge of losing his initial capital. “The regulators failed to understand the impact of machine-based selling, a strategy adopted by foreign portfolio investors. This proved to be the death knell for smaller investors like me,” he explains.