The much expected "Black Monday" finally turned out to be a "Golden Monday" to the disappointment of many !
Short sellers and investors who sold prior to the election results had to make a U turn and reverse their position as the outcome of the polls have jolted them. Investors who were waiting in the sidelines for the past few months, wanted to buy as the markets opened on Monday. Investors who bought at lower levels in the last one year wanted to take advantage of the good news and sell when the going is good.
FIIs & Hedge Funds, DFIs, etc., . . . all wanted to use this opportunity and look what happenned on Monday . . .
Brokers shut down business for the day as it was halted twice due to circuit filter trigger. No brokerage for them. Government lost revenue by way of STT, ST, EC, Stamp Duty, etc. But thats not the key issue. Retail Investors and DFIs could not book thier profits when the market gave an yield of 20 % per day ( technically, it works out to roughly 7,200 % per annum ! ) and forced to wait for another 24 hours - wondering whether all this euphoria will last till then.
Thankfully the overall markets continue to be positive till now.
Mutual Funds called it a no business day !
Now, this is a key issue to be addressed. MFs cannot be blamed because they cannot do business based on fairly unreliable data. In a market which clocks a volume of about Rs. 75,000 crores a day, it was hardly around Rs.3,000 crores on this Golden Monday, which includes both the cash and F & O Segments !
The market was open just for a few minutes and the number of trades were also low. Any decision taken based on such low volumes could be misleading. The volume on the succeeding day was a whopping Rs.1,57,781 Crores.
But its also not fair to the investors; particularly in this case they had to wait for more than 72 hours or three days for submitting the redemption request or purchase request amidst the crucial election results. The loss or gain could have been substantial during this period.
Is there a way out ?
May be.... if we look at what is done when an individual scrip touches the circuit breaker - it does not matter whether its upper or lower; Trading is not halted in that particular scrip. The investors are allowed to trade in the scrip throughout the trading hours, subject to the circuit limit.
Trading continues at the limits specified until the circuit filter is revised. This enables the investors to enter or exit in a particular scrip depending upon the situation.
This method is not without its own pitfalls; there may be lots of practical difficulties in implementing this system. But this is only a broad outline and may be time has come for us to work out some strategy to overcome this lacuna.
We cannot simply say that these kind of instances are rare events and ignore it. We are in an era of coalition and globalisation. Both will bring in great element of uncertainity, forcing us to be more prepared and vigilant.
Lets not have a "No Business Day" at all in the future !
