Supreme Court spoils party of Bulls in Dalal Street
Today, early in the morning, we had gathered as usual outside the gates of Jeejeebhoy Towers in Dalal Street, our hearts joyful at the prospect of being able to effortlessly rake in gains as we have been doing over the past several weeks.
Anil Singhvi, the charismatic editor of ZEE Business, who is well-known for his astute reading of the state of the markets, had assured us that the Bull run would continue unabated and that we can continue punting without any fear.
“Data bahut majboot hai …. yeh teji ka wakt hai .. aap short na kare,” he said, reeling out impressive numbers of the shorts who are trapped in the system and who would propel the Indices upwards.
बैंक निफ्टी में 29900 के लक्ष्य के साथ बने रहें, शॉर्ट न करें। फ्रेश एंट्री 29450-29550 के आसपास करें और 29750-29900 का लक्ष्य रखें: अनिल सिंघवी#MarketStrategy #Nifty #BankNifty @AnilSinghvi_ pic.twitter.com/ERpmK0gd1a
— Zee Business (@ZeeBusiness) November 18, 2020
His prediction played out as per plan with the Nifty and BankNifty costing in an upward trajectory.
However, unfortunately, everyone had forgotten that the Supreme Court had scheduled a hearing of an important matter relating to waiver of interest on moratorium loans for today.
Our forgetfulness is not surprising because the matter has been adjourned on all the earlier occasions on one pretext or the other and so everyone was taking it lightly.
At precisely 1350 hours IST, ETNow reported that the Supreme Court had taken a negative view about the issue of interest waiver.
“Credit card users shouldn’t be given benefit of compound interest waiver,” the Court had held in a grim tone.
#Moratorium Case in #SupremeCourt: Credit card users shouldn't be given benefit of compound interest waiver. SC says that credit card users aren't borrowers, since they don't have a loan, they're purchasing pic.twitter.com/yT1f4BjN7q
— ET NOW (@ETNOWlive) November 19, 2020
It also transpired that there are several other issues of seminal importance which are yet to be decided by the Court which could make or break the fortunes of Banks & NBFCs.
— ET NOW (@ETNOWlive) November 19, 2020
Naturally, panic gripped all Punters and there was a stampede for the exit door.
In the melee, the BankNifty plunged a colossal 847 points while the Nifty lost 167 points.
I was caught off guard & suffered huge loss
Asit Baran Pati is a well-known trader-cum-trainer on Dalal Street, famous for his screenshots of massive MTM gains.
He had created a sensation in Dalal Street a few months ago by reporting a mammoth earning of Rs. 77 lakh in a single day.
previous one of 35l..includes one Odin A/c..Saw 94l, greed of 1cr did me in..paid the price of breaking my own rule..Last but not the least a big thanks to our beloved PM ModiJi, ModiJi hey toh mumkin hey..
— Asit Baran Pati (@asitbaran) May 13, 2020
Since then, he has been periodically posting screenshots of gains and losses.
He has also explained the entire game plan as to how traders can do “Intraday Index Scalping -Using setups for chasing Delta” in a tutorial for Traders Gurukul.
Incidentally, the record of Rs. 77 lakh was broken a few days ago by another trader named Manu Bhatia who reported a gain of Rs. 1.23 crore.
Unfortunately, today, Pati was caught on the wrong foot by the sudden reversal of the data and suffered a crippling loss.
“One of the horrible days in recent past where caught off guard by the slide..was carrying heavy longs..was at 1.7cr loss at one point of time..ended with ~95l loss..what a shame to lose money in a Bull run,” he candidly and bravely reported.
A study of the screenshot reveals that Pati was sitting pretty on truckloads of Calls of the BankNifty and also of Banks & NBFC stocks like Bajaj Finance, Bajaj Finserv, Axis Bank, Bandhan Bank etc and also of several high-beta stocks.
It appears that the Options were naked and not spreads.
Naked Options (Calls & Puts) are notorious for crumpling in value at the slightest hint of adverse news.
It also appears that no stop loss may have been placed in the system.
Anyway, with some dexterity, Pati was able to reduce the loss from Rs. 1.7 crore to Rs. 95 lakh.
He also reported that, even after the loss, he has earned a return of 5% for the month, which is quite impressive.
“Will take a break and will get back again,” he said, implying that after such grueling incidents, it is best to switch off and recharge the batteries before returning to the Battlefield.
One of the horrible days in recent past where caught off guard by the slide..was carrying heavy longs..was at 1.7cr loss at one point of time..ended with ~95l loss..what a shame to lose money in a Bull run..still up by 5% for the month..will take a break and will get back again.. pic.twitter.com/zQqhXjsPsJ
— Asit Baran Pati (@asitbaran) November 19, 2020
Is this the end of the Bull run?
Anyway, the worry which is foremost in our minds is whether today’s savage fall marks the end of the Bull market and our days of free lunch money?
Some Perma-Bulls like Mukeshbhai claimed that the Bull Run is still intact and that this is a mere hiccup.
He pointed out that such corrections are normal given the massive surge over the past few months.
However, others claimed that the Damocles sword would continue to hover over the markets until the Supreme Court resolves the litigation one way or the other.
We will have to wait for Anil Singhvi’s authoritative views on the issue before coming to a conclusion in the matter!