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Control Your Emotions During  Trading

PICK OF THE WEEK.

The famous ‘Zurich Axioms’ say ‘when the ship

starts to sink, don’t think just jump’. Similar

condition was observed on Indian bourses this week

after exchanges announced the imposition of a 100%

margin on B1 and B2 category stocks from the

following week. The markets panicked and most

small caps ended on lower circuit following this

announcement. Added to this was the volatility on

the back fresh fears of nationwide raid on brokers

conducted to check unscrupulous activities.

Thursday’s session turned out to be brutal with all

the constituents of both the broad indices ending in

red. The Sensex and Nifty suffered their biggest falls

since 17 May 2004. The BSE- mid cap and BSEsmall

cap index were hammered down 6.54% and

11.19% respectively. Sectorally, metals, technology,

auto and FMCG companies were the worst hit.

The following week could see some recovery if the

Nifty sustains above 2440 levels. With short covering

restricting the potential downside, investors can look

at entering quality mid-caps at current levels.

The huge sell-off this week was due to the following reasons:

1. Investors booked profit after the Sensex gained over 2000 points in the last five months
2. Markets were expecting a technical correction
3. Exchanges shifted 850 scrips to the T Group (mainly small cap stocks)
4. BSE and NSE also reduced circuit filters on all T Group scrips and Z Group scrips
5. Margins on many B1 and B2 scrips were increased to 100%. Most of them were in the funding category
6. Weakness in the global markets
7. Rising crude oil prices and impact of hurricanes on the US economy
8. Market talk of margin pressure on brokers
9. FIIs were net sellers of nearly Rs11bn in derivatives while being net buyers of Rs12.4bn in the cash segment

Major losers this week

SECTOR WATCH.

WHY  EXPERT ADVICE

BOOK CLOSURE/RECORD DATE.

IPO-WATCH.

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