While the investors who escaped the market mayhem this morning are breathing easy, it does not appear that the market may hold on to the gains, according to a former President of Coimbatore Stock Exchange (CSX) K. Annamalai.
He admitted that the market sentiments had definitely turned positive following the slew of policy announcements made by the Centre. But this mood change in itself did not warrant the sort of euphoria the market had witnessed since there has been no significant change at the ground level and the benefits of the reforms announced would take time to reflect on the corporate performance.
Speaking to Business Line he pointed out that a large number of frontline stocks had crashed by 20 per cent or more during the market crash this morning.
He pointed out that HUL which opened at Rs 559 fell to a low of Rs 444.5 before bouncing back to close at Rs 565.40; M&M slipped to a low of Rs 701 from the opening rate of Rs 861 before recovering to Rs 869; Bajaj Auto dived to a low of Rs 1,597.50 after opening at Rs 1,784 before recovering to Rs 1,751.05; HDFC Bank had crashed to a low of Rs 505.05 from Rs 638 at the opening but came back strongly to Rs 622.40; TCS sank to Rs 1,055 from its opening price of Rs 1,325 but moved back to Rs 1,304 and SBI after a strong opening of Rs 2,350, had crashed to a low of Rs 2,010.30 before recovering to Rs 2,339.45.
Annamalai said the investors who had placed a sell order at the market price just ahead of the market crash and had their selling executed would have suffered a blow. It was said that the 59 erroneous orders placed by Emkay Global Financial Services was valued Rs 650 crore.
Referring to the euphoria the market has been witnessing for the past few weeks, he said for the rally to sustain the economy should put up a better show and inflation should be tamed before interest rates could come down significantly. For instance, other than the minor tinkering with interest rates, the banks have not slashed the interest rates drastically and the RBI has not given any indication that the interest rates would head south anytime soon in view of the stubbornly high inflation.
He said the momentum might provide an opportunity for the operators to unwind their position. But predictions of Sensex touching 23,000 levels in coming months were way off the mark.
The former Coimbatore Stock Exchange President urged the investors to book profit in stocks which had appreciated significantly and wait for the market to correct before making fresh entry.
The shares of Emkay Global Financial Services in the eye of the erroneous order storm took a pounding on the NSE with the stock falling by 10 per cent or Rs 3.45 at Rs 31.05. An NSE statement said that it had “closed all Emkay Global positions after trading error” and the member was disabled. But it was not clear whether the orders placed by others executed during the free fall were or would be annulled. Annamalai said he was trying to verify the fate of the orders that were executed at that time.