Like WW I which began with the assassination of a couple and eventually snuffed out 40 million lives, most catastrophes have a small and unlikely beginning. The meltdown of global markets on Monday, August 5 was no exception. It began with the US indices showing nervousness on Friday, August 2 after a jump in unemployment rates in July.
Contagion
The contagion quickly spread to Asian markets and on Monday, August 5, investors lost Rs 15 lakh crore on a single day. As the Indian markets opened for trade, the indices of Japan and South Korea, two of Asia’s principal markets sunk deep into red.
Whether to book profits
“Black Monday” began flying off the keyboards as panic-stricken investors began furiously calling investment advisors seeking advice on whether to sell and book profits. “Since the drop came against the background of a very long bull run, investors were anxious to book the hefty gains they have made in the past several months and not lose the cream due to some fuzzy US labour market data,” quipped Nilanjan Dey, investment strategist and director Wishlist Capital.
Rewind to the trading floors
By the mid-1990s, electronic trading kicked off in the Indian stock markets. “If a crash like Monday happened in that era, the trading floor on BSE or other markets like Kolkata, would have resembled a theatre of India-Pakistan war. Traders would be yelling their lungs out, throwing their hands frantically in the air and jumping around in exasperation,” said Uttam Singhania, who began his investment journey in Kolkata in the 1980s with Rs 300.
The head of eastern region of Monarch Networth Capital Richeek Ganguly got countless calls from investors to sell some of their holdings. The trading style has changed since the days of the 1987 crash in the US or the Harshad Mehta scam in 1992, but panic and investors have remained inseparable.
Bulls could return soon
Veteran investment advisor Prasunjit Mukherjee thinks that the bulls might not sit out for long. With the sort of money that retail investors pump in the market every month, the markets might begin to rise soon, he said.
However, Tuesday August 6 – Hiroshima Day quite ironically – could usher in a better mood among investors. The Asian markets Nikkei 225, Straits Times (of Singapore) Taiwan Weighted and Kospi (of South Korea) were in the green.
Trader frenzy on market floors have been replaced by electronic screens long ago. But panic spreads faster among investors in this age of electronic communication as August 5 demonstrated. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
