Thursday, 20 November 2008

Swinging sensex scorches investors

NEW DELHI (Reuters) - Things were going quite well for Sanjeev Jain.

For nearly twenty years, the stock market had been kind to this investor from Chandigarh, helping him lead a comfortable life with his profits.

But in one fell swoop this January, Jain lost his investment of ten million rupees when the stock market plunged from a record high amid fears of a global downturn.

"It took just three days and my wealth was reduced to zero," said the 36-year-old divorcee. “This market is nothing but a legalized gamble."

Thousands of investors like Jain have had their lives turned upside down by the yo-yoing effect of stocks since January -- rallying on good news one day, dipping into negative territory the next.

The BSE Sensex, considered the barometer of its once booming economy, has lost 58.3 percent in 2008, making it one of the worst performers in Asia.

Thursday’s close of 8,451.01 was its lowest since Nov. 10, 2005.

In a bid to recoup his earlier losses, investor Dharmendra Verma ventured into derivatives trading, which involves speculating about the future movement of stocks and indices.

Not only did he lose his investment, Verma was fired from the Delhi-based brokerage firm where he worked, part of a cost-cutting exercise brought on by the fluctuating market.

"I will not work at a place where I have to sell things," said Verma, still unemployed in his late 20s.


The stock market malaise has led to people consulting psychiatrists like Samir Parikh, who said he had been approached by people with problems stemming from money lost speculating in shares.

"Finance has a very large impact on one’s life today," the Delhi-based psychiatrist said. “World over it has been seen that financial losses have led to suicides”.

In India, investors like Rajender Singh, unable to bear the burden of debt, have taken their own lives.

Singh, a resident of Gurgaon on the outskirts of New Delhi, committed suicide last week. Media reports said the 40-year-old businessman had lost eight million rupees in the stock market slump.

Suicides were also reported from Ahmedabad, Hyderabad and from Mumbai itself, where a man who lost his life savings on the stock market killed his pregnant wife and took his own life.

Experts say uncertainty about the immediate future is a concern though there is still optimism about the long-term prospects of Indian stock markets.

"Trading in stocks should be a big no for ordinary investors, be it in cash or the derivatives segment," says V.K. Sharma, head of research at Anagram Stockbroking.

He suggests that people with a very short term plan should stay away from markets.

But even seasoned players have found it difficult to predict the way the market swings.

Selling off the gold ornaments he owned, Jain tried to re-enter the markets in April to recoup his losses, but to no avail.

His biggest worry now is repaying a loan of 3.3 million rupees he had taken two years ago in order to invest in the market.

Jain has learned his lesson. He now tells his family and friends to stay away from investing in equities.

"If you try to grow your money, you will be left with nothing," he said.

No comments:

Post a Comment

DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. The author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and that you confirm the facts on your own before making important investment commitments.