Wednesday, 12 December 2007

Market Mayhem

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.


Tina said...

How come Sam figures in this blog as well? Has he left cricket for good and become a long term investor?

KR said...

That was one of the most fantastic days of my life....My first step in the Stock market that ended as RED (loss) in my profile... but the fun and the excitement as mentioned was worth that... i still remember me having early lunch with Zerd so that we can jump back to our chairs with our eyes glued to the monitor observing the waves in the price of Infosys... slowly i learned the trades of the market..though these lessons has cost me a fortune with a lot of REDs in my profile... but that helped to make a lot of GREENs too.. and the excitement on chat that has been mentioned in this blog was priceless... we still get excited by reading that... Def. one of the best day in the history of 24 NKS Mansion (to those who don't know...this was the name of our house)...

As the day turned to night we (Zerd, Pranky and myself) waited eagerly for Sam to come back from office ... we needed the fourth shoulder neither to lift the dead-body of our dreams nor to cry on the losses but to be more appropriate we needed the fourth scholar's hand to be lifted up in air....and to say..... "Cheers" [:)] .. the loss was im-material over the fun that we had and the laughs over whiskey..

The dead-body of our dreams...(ha ha ha) our dreams never died, this loss gave us the 'spirit' to drink..oops... i mean the spirit and courage to fight back and to get back out losses..this fire to fight back the market officially (or un-officially) pushed us into Stocks..

we 3 (Zerd, Pranky and myself) that night were welcomed by Sam (and we also welcomed ourselves) to the world of so called "Stock Market..."

The only line that was coming in my mind that day was ... "Girte hai shah-sawar he maidan-e-jung me, Woh tifr kya gire jo ghutno ke bal chale"...those who dare and stand up might fall as compared to the one already on ground and not ready to get up... like in a battle those who ride a horse will fall on the ground as compared to a soldier already crawling...

Well the time has changed and so is the market but we still believe and have faith on our stock guru Sam and i still believe Infosys prices will go up....

Take care
Long live our Stock Market

pankaj said...

ultimate...bahoot khub...wah wah doubt one of the most memorable days of our life when this panky became pranky ...aaj main jo kuch bhi hun ...sam aur uske lord of the rings prem ki wajah se ...
i will be rich ....richer....richest ....

sahi kaha ROZ ne... girte hain sehsawar hi maidane jung main.... wo tifir hi kya gire jo ghutne ke bal chale...