How many among us still remember our first sting with the stock market? How intriguing it felt in the beginning… and how excited we were with our first profits… well, not everyone starts on the right foot. The following few pages are a true narration, spanned over one worthless Monday where four IT professionals try their luck at making a quick buck. Welcome to the Indian Stock Market.
We’ve heard a lot about how greed and fear decide the emotion of a trader; when greed takes over fear and the other way round. This chat transcript quite articulately showcases these feelings. The foursomes are: Pranky, Zerd, Roz and Sam.
On 6th of April 2006 late Thursday evening Sam informed his erstwhile room mates about a potential money making opportunity. “Infosys was supposed to make a bonus announcement, tomorrow the stock price will zoom; if we buy and sell it right, we can make one grand easily”. All sat straight, trying to absorb the words that they heard and blinking their eyes to tell themselves that it was real. One grand is big money. The next half an hour or so was spent in speculating how many shares to buy and at what price. Sam patiently explained to them about the 4 times exposure that they can take which implied that they could buy 4 times the shares worth with their money. Of course they need to close the credit within the next 2 days.
7th April, for the first time in 24NKS Mansion history all of them woke up early and reached office before 9:55 AM, much to Sam’s surprise. Before the market opened the monies were also transfer to Sam’s account who was supposed to make the transactions on their behalf.
The last trading price of Infosys was at 3114 INR per share on Friday.
Roz says: Sam remember to keep Zerd’s bids on hold
Zerd says: buy 28
Sam says: He's asked me to buy
Roz says: okie
Roz says: 12 for me
Sam says: How many do you want me to buy now?
Zerd says: Sam what is the bid price you are putting
Sam says: Boy!!! Its 3310 against the close at 3114…
Roz says: Ya I saw that
Zerd says: It still shows 3114 to me…:-S
Sam says: Boss its too costly
Roz says: You can buy it Zerd if it shows that price to you ;-)
Sam says: Opened at 3365
Sam says: We’d become beggars if we buy this costly…
Sam says: 3300 now… going down
Zerd says: Is it falling?
Roz says: Sam, I think still its worth...
Sam says: 3290
Roz says: Hey… its falling.
Those were the opening 10 minutes. The scrip price was already flying high from the previous closing price, but gradually coming down. The guys had identified that 3250 would be an extremely enviable price to buy the scrip; though the buy orders were on hold and not yet placed.
One hour hence the scrip lost further ground and was trading at 3240… our new analysts had fallen from grace as soon as they thought they had gained that rank. This time the geniuses studied the charts and identified 3200 as the new support. Buy orders were placed at the so called mouthwatering price. The foursome were in discussion when the price corrected further to 3220 levels, 3216 and then 3208… all watched their terminal with batted breathe. Zerd was accessing an ancient terminal and hence his price quotes were delayed. The guys were greedy and wanted to see the price correct further so that they bought it at the lowest point. Who doesn’t want to beat the market? The falling ceased and the scrip zoomed to 3240 levels; touching a day’s low of 3201... Disappointment reeled within them.
The next moment the guys were convinced about their recently acclaimed competency in articulating the lows about the scrip. The buy orders that were tentative earlier became more vocal and a bit aggressive. Time was running out, neither the scrip price nor the buy orders budged. Finally the guys gave in and the buy orders were divided into two parts… one at 3220 and the order at 3205. This was a wise decision we thought, time had a completely different verdict chosen.
The guys were proven right, but partially… the scrip came down to 3209 and went back to 3230 again. One lot of their buy order was executed… they were congratulating and thanking each other. Having won the battle of wits, the guys decided to take a short lunch break.
Post lunch the scene had not changed much other than the fact that Infy had made a fresh bottom at 3161 but was again back at 3220. All buy orders executed; now all that the guys wanted was the price to go higher.
Only one hour left, the guys were glued to the terminal then ever before. Infy after having given the guys a short period of happiness had resumed it downward journey halting at 3180 and then at 3160. The picture hadn’t changed in the next one hour except for the fact that Zerd had withheld one last leap at 3160 to average down his buy. Last 15 minutes of trade were a sorry sight for all. The scrip gyrated from 3160 to 3180 and we sold it at that level. Leave apart making money, the guys later thought that having kept out of the market would have saved them the losses. It was exciting they agreed and intriguing too. Pranky had made a suggestion to celebrate the day with beer and whiskey. The losses were around one grand in total, but the excitement, the adrenaline, the tension… it was worth it. Sam mentioned that the day was apt for “short selling”. The concept of selling earlier at a high and buying later and pocketing the difference was so interesting that momentarily the guys forgot their losses and made imaginary calculations on how much they’d have made had they gone for short selling. Pranky also suggested to update the losses in the Kharcha-Pani excel that used to keep track of the monthly expenses of the house.
Of course, much water has flown down the Ganges since 7th of April 2006, but have the foursome learnt their lessons? In-spite of the losses made, that day still holds a special place in everyone’s heart, including Sam’s.
The foursomes are still in touch with the stock market. Roz till sometime back still had Infy in his demat account. Even the rupee strengthening had not shaken his belief that Infy will one day be in green in his portfolio. Pranky and Zerd have become hardcore traders…Last what I had heard was that they were becoming better and better in buying low and selling high… all in a day. Sam has resolved to studying sectors and investing for the long term and is horrible with short term intraday picks.
We’ve heard a lot about how greed and fear decide the emotion of a trader; when greed takes over fear and the other way round. This chat transcript quite articulately showcases these feelings. The foursomes are: Pranky, Zerd, Roz and Sam.
On 6th of April 2006 late Thursday evening Sam informed his erstwhile room mates about a potential money making opportunity. “Infosys was supposed to make a bonus announcement, tomorrow the stock price will zoom; if we buy and sell it right, we can make one grand easily”. All sat straight, trying to absorb the words that they heard and blinking their eyes to tell themselves that it was real. One grand is big money. The next half an hour or so was spent in speculating how many shares to buy and at what price. Sam patiently explained to them about the 4 times exposure that they can take which implied that they could buy 4 times the shares worth with their money. Of course they need to close the credit within the next 2 days.
7th April, for the first time in 24NKS Mansion history all of them woke up early and reached office before 9:55 AM, much to Sam’s surprise. Before the market opened the monies were also transfer to Sam’s account who was supposed to make the transactions on their behalf.
The last trading price of Infosys was at 3114 INR per share on Friday.
Roz says: Sam remember to keep Zerd’s bids on hold
Zerd says: buy 28
Sam says: He's asked me to buy
Roz says: okie
Roz says: 12 for me
Sam says: How many do you want me to buy now?
Zerd says: Sam what is the bid price you are putting
Sam says: Boy!!! Its 3310 against the close at 3114…
Roz says: Ya I saw that
Zerd says: It still shows 3114 to me…:-S
Sam says: Boss its too costly
Roz says: You can buy it Zerd if it shows that price to you ;-)
Sam says: Opened at 3365
Sam says: We’d become beggars if we buy this costly…
Sam says: 3300 now… going down
Zerd says: Is it falling?
Roz says: Sam, I think still its worth...
Sam says: 3290
Roz says: Hey… its falling.
Those were the opening 10 minutes. The scrip price was already flying high from the previous closing price, but gradually coming down. The guys had identified that 3250 would be an extremely enviable price to buy the scrip; though the buy orders were on hold and not yet placed.
One hour hence the scrip lost further ground and was trading at 3240… our new analysts had fallen from grace as soon as they thought they had gained that rank. This time the geniuses studied the charts and identified 3200 as the new support. Buy orders were placed at the so called mouthwatering price. The foursome were in discussion when the price corrected further to 3220 levels, 3216 and then 3208… all watched their terminal with batted breathe. Zerd was accessing an ancient terminal and hence his price quotes were delayed. The guys were greedy and wanted to see the price correct further so that they bought it at the lowest point. Who doesn’t want to beat the market? The falling ceased and the scrip zoomed to 3240 levels; touching a day’s low of 3201... Disappointment reeled within them.
The next moment the guys were convinced about their recently acclaimed competency in articulating the lows about the scrip. The buy orders that were tentative earlier became more vocal and a bit aggressive. Time was running out, neither the scrip price nor the buy orders budged. Finally the guys gave in and the buy orders were divided into two parts… one at 3220 and the order at 3205. This was a wise decision we thought, time had a completely different verdict chosen.
The guys were proven right, but partially… the scrip came down to 3209 and went back to 3230 again. One lot of their buy order was executed… they were congratulating and thanking each other. Having won the battle of wits, the guys decided to take a short lunch break.
Post lunch the scene had not changed much other than the fact that Infy had made a fresh bottom at 3161 but was again back at 3220. All buy orders executed; now all that the guys wanted was the price to go higher.
Only one hour left, the guys were glued to the terminal then ever before. Infy after having given the guys a short period of happiness had resumed it downward journey halting at 3180 and then at 3160. The picture hadn’t changed in the next one hour except for the fact that Zerd had withheld one last leap at 3160 to average down his buy. Last 15 minutes of trade were a sorry sight for all. The scrip gyrated from 3160 to 3180 and we sold it at that level. Leave apart making money, the guys later thought that having kept out of the market would have saved them the losses. It was exciting they agreed and intriguing too. Pranky had made a suggestion to celebrate the day with beer and whiskey. The losses were around one grand in total, but the excitement, the adrenaline, the tension… it was worth it. Sam mentioned that the day was apt for “short selling”. The concept of selling earlier at a high and buying later and pocketing the difference was so interesting that momentarily the guys forgot their losses and made imaginary calculations on how much they’d have made had they gone for short selling. Pranky also suggested to update the losses in the Kharcha-Pani excel that used to keep track of the monthly expenses of the house.
Of course, much water has flown down the Ganges since 7th of April 2006, but have the foursome learnt their lessons? In-spite of the losses made, that day still holds a special place in everyone’s heart, including Sam’s.
The foursomes are still in touch with the stock market. Roz till sometime back still had Infy in his demat account. Even the rupee strengthening had not shaken his belief that Infy will one day be in green in his portfolio. Pranky and Zerd have become hardcore traders…Last what I had heard was that they were becoming better and better in buying low and selling high… all in a day. Sam has resolved to studying sectors and investing for the long term and is horrible with short term intraday picks.
