24th August: The Day The Bear Makes His First Million!

While the whole world is seeing at the bloodbath happening in the markets today, an interesting thought is coming to my mind. As the big stocks have already taken a beating, a quick gaze over the Top Gainers space in MoneyControl is only showing you "No Data available".

Now let us try to think the other way that where is the money flowing in this market?
Is there any money really getting tanked down? Going by news, is it true that 3 lakh crore of investor wealth has been wiped out?


Yes, it is true, that the money has been wiped out, but ideally what has happened is that the direction of the flow has reversed.

We all know that the Indian stock market is composed of both bulls and bears. Today was a day, when the latter won, and with extreme favour of luck. On such a bloodbath market, no matter which stock you are shorting, one thing you can be sure is that you WILL SURELY  win.

When all the large counters like TATA, BHEL, L&T. LUPIN were suffering the fall from morning, the bears hiding in the bushes played their game and a collective game it must have been!Every intraday short-sell has been paid off at an average 10-20% ROI. Imagine, that much percentage turnover on a single day, amidst a Chinese weak sentiment news. What better could it be, but to capitalize on this cue! Its like minting money at the cost of a trend.

If this downfall of the market is considered to be a true move, that would ideally mean that the fundamentals of our PSU's, banks, autos, IT's are completely maligned. As if we are completely dependant on the Chinese investments, and our own system has only been falsely pumped up with fake wealth.
If you are placing a margin short-sell of 10 Lakhs, (Actual Amount: 1 Lakh in account), you would be easily making at least 15%, i.e like 11.5 Lakh in this bloodbath market. So ideally you had only 1 lakh in your account, but you have made an extra 1.3 lakhs (excluding brokerages). Now imagine, a collective group of bears performing this over a wide set of counters. Now, you can see where all this wealth is actually flowing!

Normally bears look for such a day when some negative global news can cue in some positive luck for them! And bang on, today was the day!

All these days when the Sensex was rising, we were all happy, but I am sure our shorter friends must have been losing quite a much.  For all those happy people reading this now must be preparing for a massive night party. But, like the world is round, so is the play of the dark and light.
Today, I remember something that we read in our childhood days. "Money changes hands". Whats now a paradise for the bears, might easily turn as heaven for bulls tomorrow.

For the investor, this is hardly a concern, because fundamentally strong stocks will move past such turbulence.
For many shorters, today 24th August, will become "The Day I Made My First/Few Million".

If you are one such lucky bear, don't forget to share your comment here. Anonymous posting is allowed :)