dkishore
25-03-2008, 07:29 AM
Looking at the prices at which some of the (erstwhile) high-flying stocks are now quoting at, an investor may be forgiven for assuming that the companies may have recently announced a bonus issue or a stock split, or perhaps even both. Rumour mills are working overtime, as stocks post steep intra-day losses.
The flavour of the season seems to be losses on derivatives transactions. Officials at some of the companies promptly surfaced on business channels to refute the talk. In most cases, the fall genuinely has nothing to do with complex derivatives trades. The reason is much simpler.
A lot of margin financed trades are being liquidated, as investors are no longer willing (or no longer in a position) to replenish their margin commitments, and brokers are in no mood to wait any further. These buyers include high net worth individuals, market operators and even friendly circles.
On Tuesday, a broking firm, which prides itself as one of the prime players in the mid-cap space, is reported to have dumped huge quantities of S Kumars Nationwide, IOL Netcom and Aban Offshore. Lack of liquidity in the market is bad enough. But when some of the staunch supporters of a stock begin to jump ship, even the bargain hunters prefer to stay away.
The flavour of the season seems to be losses on derivatives transactions. Officials at some of the companies promptly surfaced on business channels to refute the talk. In most cases, the fall genuinely has nothing to do with complex derivatives trades. The reason is much simpler.
A lot of margin financed trades are being liquidated, as investors are no longer willing (or no longer in a position) to replenish their margin commitments, and brokers are in no mood to wait any further. These buyers include high net worth individuals, market operators and even friendly circles.
On Tuesday, a broking firm, which prides itself as one of the prime players in the mid-cap space, is reported to have dumped huge quantities of S Kumars Nationwide, IOL Netcom and Aban Offshore. Lack of liquidity in the market is bad enough. But when some of the staunch supporters of a stock begin to jump ship, even the bargain hunters prefer to stay away.