What went wrong on January 22, 2008?
Posted 26th January 2008 at 10:53 AM by iamcoolna
What went wrong on January 22, 2008?
A greed of a person can take him nowhere except to the darkness of sorrow. A greed can kill the intellect of human being. It was a fine morning on January 22, 2008 till 9.55 a.m when the opening bells for the Indian Stock Market rang. It was an alarm for the Bulls but soon it was too late for them to escape the trap of the Butcher Bears. It seems that on that day the Bears were inspired from a butcher of a slaughter house. And within a blink of eye the stock exchange was closed down to 10 percent and million crores of hard-earned money of investors was wiped out in blood of the Bulls. The Stock Exchange was reopened one hour later but this time the Butcher Bear turned into Vampire, who sucked the blood of the Bull and left just flesh in them, leading the stock market to kiss the levels down to 14.70 percent. But who actually was behind the mask of this Butcher Bear, is a million dollar question. Many of us can easily answer this million dollar question as FII’s and global economic condition.
Infact it was a greed of people to become rich overnight, a greed to earn faster and faster. And above this, lack of adequate Margin or Leverage policy in our country, which gave very sharp knifes in hands of the Bears. There is no such policy in India which regulates margins given by the brokers to their clients, or leverage positions. Generally the brokerage houses allow their clients to buy stocks upto the value four times of the money which the clients give to their brokers. The Broker has to pay to the Exchanges the entire payment on day to day basis. The greedy traders keeps on buying stocks on margins with a view to earn even a penny, but whenever stock market starts getting volatile, these greedy traders gets into the trap of Margin pressures and unwinding of leverage positions. Brokers either starts demanding the entire money from the client or have no other option except to sell the shares of the client at any rate to recover the money from the client so that they can pay back to the exchange. And this actually happened on January 22, 2008, when margin pressure on the clients of leading brokerage houses led them to forcefully sell their shares at whatever price they can. Even the brokers sold their client’s shares at any rate, to recover money from them, which lead into the drastic disaster which ruin hundreds of crores from the stock market. These brokers and greedy traders were the real Bears who made January 22, 2008 a gloomy day in the history of Indian Stock Market.
When Government can make good agriculture polices, credit polices, industrial polices, banking polices, why there can not be better polices for regulating such margin or leveraged positions in stock market. Why didn’t SEBI stepped into, to make such adequate polices to regularize margin or leveraged system in our stock market. If there would have been a better policy, we would have a very stable stock market. If there would have been a better policy, our Bulls would have sustained on that day. If there would have been a better policy, we would not have suffered such financial losses. If there would have been a better policy, we would not have walked on that blood path.
I can easily pen it down as I am one of those greedy traders…..Siddharth S. Dev
A greed of a person can take him nowhere except to the darkness of sorrow. A greed can kill the intellect of human being. It was a fine morning on January 22, 2008 till 9.55 a.m when the opening bells for the Indian Stock Market rang. It was an alarm for the Bulls but soon it was too late for them to escape the trap of the Butcher Bears. It seems that on that day the Bears were inspired from a butcher of a slaughter house. And within a blink of eye the stock exchange was closed down to 10 percent and million crores of hard-earned money of investors was wiped out in blood of the Bulls. The Stock Exchange was reopened one hour later but this time the Butcher Bear turned into Vampire, who sucked the blood of the Bull and left just flesh in them, leading the stock market to kiss the levels down to 14.70 percent. But who actually was behind the mask of this Butcher Bear, is a million dollar question. Many of us can easily answer this million dollar question as FII’s and global economic condition.
Infact it was a greed of people to become rich overnight, a greed to earn faster and faster. And above this, lack of adequate Margin or Leverage policy in our country, which gave very sharp knifes in hands of the Bears. There is no such policy in India which regulates margins given by the brokers to their clients, or leverage positions. Generally the brokerage houses allow their clients to buy stocks upto the value four times of the money which the clients give to their brokers. The Broker has to pay to the Exchanges the entire payment on day to day basis. The greedy traders keeps on buying stocks on margins with a view to earn even a penny, but whenever stock market starts getting volatile, these greedy traders gets into the trap of Margin pressures and unwinding of leverage positions. Brokers either starts demanding the entire money from the client or have no other option except to sell the shares of the client at any rate to recover the money from the client so that they can pay back to the exchange. And this actually happened on January 22, 2008, when margin pressure on the clients of leading brokerage houses led them to forcefully sell their shares at whatever price they can. Even the brokers sold their client’s shares at any rate, to recover money from them, which lead into the drastic disaster which ruin hundreds of crores from the stock market. These brokers and greedy traders were the real Bears who made January 22, 2008 a gloomy day in the history of Indian Stock Market.
When Government can make good agriculture polices, credit polices, industrial polices, banking polices, why there can not be better polices for regulating such margin or leveraged positions in stock market. Why didn’t SEBI stepped into, to make such adequate polices to regularize margin or leveraged system in our stock market. If there would have been a better policy, we would have a very stable stock market. If there would have been a better policy, our Bulls would have sustained on that day. If there would have been a better policy, we would not have suffered such financial losses. If there would have been a better policy, we would not have walked on that blood path.
I can easily pen it down as I am one of those greedy traders…..Siddharth S. Dev
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