Brokers, investors helplessly watch rerun of their own tragedy

Brokers, investors helplessly watch rerun of their own tragedy
GEORGE MATHEW

MUMBAI, MARCH 30: As the Bombay Stock Exchange watched the remake of a familiar tragedy, the story of a Pied Piper disappearing with small stock-brokers and lakhs of investors, there was a helpless silence on Dalal Street. The brokers knew the end of the script half way through the show, but the exit routes had been sealed.

There are no tears -- only a stoic anticipation of the last moment. The disaster was in the air with the steep fall in share prices, payment crisis, defaults, regulator in the `sleep' mode and with uncertainty and panic in the market.

The bloody end of the dream run propelled by the Big Bull II has left them nervous, bitter and helpless about the entire financial system. Worried brokers are now trying to figure out the extent of damage.

``It is unfortunate that regulators SEBI and Reserve Bank of India were caught napping again. They haven't learnt from the 1992 securities scam,'' said BSE dealer Surendra Podar.

More than Ketan Parekh, stock dealers are blaming the regulators for the collapse of the market and the shaken sentiment. ``I will blame the regulators SEBI and Reserve Bank of India for the episode. They didn't do their job seriously. They didn't probe the bull run in 1999-2000. They also acted late in the bear hammering after the Budget. The government should revamp the regulators and bring in more efficient officials. Parekh used the loopholes in the system,'' said BSE broker Pawan Dharnidharka.

Many are nervous about the erosion in share prices. ``The market is in a panic mode. In all probability, it may slip further in the next two to three trading sessions. Small investors are scared about the recent developments ... they are fleeing the market, selling the stocks at lower levels. Instead, they should take advantage of the situation and accumulate high networth stocks at the prevailing unbelievable prices -- the present crisis is a temporary phenomenon and the market is bound to bounce back sooner or later,'' said broker and former BSE director Motilal Oswal.

The investor reaction is predictable. For, in Parekh's heyday, brokers and investors blindly bought the shares he targeted. The herd mind-set continues and they flee at the first sign of trouble. They tracked his investment schedules closely, like they did of Harshad Mehta in 1991-92. ``KP deserved it... nobody can take the market for a ride for ever. He should have quit when he made a whopping profit in the bull run last year... It's greed which brought him to such a situation,'' said a former BSE director and a top broker.

Another broker who closely watched the `Bombay Bull' hit the big league now expects another round of cleaning up. ``Knowing well our system and regulator, I expect a third Big Bull very soon,'' he said.

The investors and brokers are keeping their fingers crossed about the life after this weekend -- when the market opens on Monday. Parekh's arrest could lead to panic selling. ``It is a crescendo of bad news. Whatever little hope was left that Ketan Parekh would come in support of some stocks has now evaporated,'' said R.S. Gopalakrishnan of Sozo Securities, adding the BSE Sensex could fall another 5-8 per cent next week and then stabilise at that level.

``The market may take further beating in the next few days. I expect the uncertainty and nervousness to continue for the whole of next week,'' said Delhi-based stock dealer Girish Kalloo. The BSE Sensex plunged 15.13 per cent in March, shaking investors faith in a system plagued by a series of crises and investigations by the market regulator.