The Hindu Business Line : Retail investors left out of market rally

A vendor selling pictures of Goddess Laxmi, the goddess of wealth, at Dalal Street in Mumbai on Wednesday, as the Bombay Stock Exchange Sensex rallied to a high of 17,997, a biggest intra-day gain. –

Tania Kishore Jaleel

Mumbai, Jan. 23 Markets have crashed and bounced back too, but the retail investors were once again left out. With the Sensex at 17500, market watchers are saying that this is a good time to buy.

But, due to the index circuit filters and margin limits, the retail investors face difficulties. When the markets fell on Tuesday, the buying calls were frozen and investors were allowed to unwind long positions in order to comply with the margin limits.

Margin calls

This made the investors to square off their current positions to make up the margin calls. Some brokers had to even sell off their client positions to prevent margin calls from the stock exchanges.

The retail investors are calling foul now, they are saying that it is not fair that they are allowed to take full advantage of the current market levels.

“Just because some people haven’t been able to pay, there has been a limit put on all of us – even those of us who are genuine and have been paying regularly,” said Ms Gargi Shah who has been involved the markets for a long time.

Making profits

Ms Sheila (name changed) usually would give her orders to her broker, but when she called up her broker today, she was asked to give cheque before placing any order.

“I had to come all the way from Vashi just to deliver my cheque. When I have never defaulted, why should I be given limits,” she questioned.

“With the limits being put on trading, the retail investors are not able to make profits at this level. They are missing out on this chance. Putting these sorts of limits is a good thing but then again it is not fair to those genuine retail clients,” said the Senior Vice-President of a brokerage.

Healthy markets

“I got out when I thought that I could not handle the pressure in the markets. Now I am much happier investing in real estate. People should expect such volatility in the markets, it is a gamble,” he said.

“People who are not that well off are also investing; these people would have been hit hard due to these limits. The people on top should consider everything before taking such measures,” he added.

On the other hand, some feel that such limits are necessary for healthy markets. “Brokers should be strict with their clients. If nothing is done, it is only the brokers who will lose out due to the investors overextending their payments. It is fair,” said Ms Shahina Mukadam, Head Research, IDBI Capital Market Services Ltd.

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