Crash of the Sensex

Recently, there was a crash in Indian Securities market.

SEBI (Secirities Exchange Board of India) and other government agencies came down heavily on certain operators and banned trading in many scrips popularly known as penny stocks.However, in doing so, in a haste they imposed stricter trading compliance on many good B scrips by putting them in Trade 4 Trade category and by imposing 5% filter.

Although their action was justified by large section of masses, timing of action taken by them leave us much to believe in something else: selectiveness in their action;allowing enough time lap for others to close their position and importantly not allowing exit route to small and retail investors.

In a retrospect one can see that downfall in prices had already started in many stocks before the action was promulgated and thus making us believe that these agencies allowed certain group of people the exit route but blocking the same to small/retail investors.

Many leading analyst- not necessarily professional analyst (they afterall are paid dogs)- had echoed this view.

The following post was sent by me in one of the leading Investment related e-group:

"Surprisingly I also share similar views abt govt/sebi's part in this affair, of systematically allowing certain interest groups to exit from their holding before creating panicky and I have a feeling that once certain shares which are hitting lower circuits now will again be moved out of T or Z gr soon, once they have been lapped by all chors… they will be lapped by their (SEBI etc.) friends and moved out so that they can hit upper circuits from the day one of moving out of t and z gr.I feel that this is an induced/created situation and further, one can make money if you can sync your buy/sell decisions with their actions or better still ahead of their moves; anybody....if he can see hints....like a day before the panicky, TOI gave front half page news abt penny stocks when ET had not given a quarter page place also.....TOI has the largest audience in Mumbai and the news acted as precursor to fall...the news, I am sure was orchestered to have a desired effect after sellout by large player...that day mkt went down 121 pts only to recover 200 pt...closing 100up...but retail investors panicked...so the next day they could not stretch their resilience...they submitted to the pressure....265 pts down!

Really, fees for learning in financial sectors are very high but they are worth its investment...