A lot of digital brokers had hard stops for intraday positions at 3.25. These could not get squared off at that time. Then at 4:15, intraday positions got squared off at outlandish numbers. So the 1000, 1100 point increase in Bank Nifty is not the real story, says market expert Ajay Bagga.
Sebi is talking about some sort of a framework to compensate investors because they were at the receiving end of what took place in NSE today. Is this going to be the need of the hour?
I would look at it in two ways. One is the infrastructure and the digital footprint. The digital network can always fail and there the quality of planning is important. There is a parallel site to NSE in Kurla, there are city sites. When we plan such big operations, we plan for earthquakes, terror attacks where the whole city goes out, we plan for cases where the country’s network goes out and how it would be restored. I would say that today I would not have really minded technology going down.
The other issue is the psychological one. I was in a show where one of the ministers of a state government was calling the stock market a gamblers’ den. If you look at the brokerage statement, out of every Rs 100 that the customer is charged, Rs 75 is going into the government’s pocket as STT, as GST, as various exchange levies, SEBI levies. But there is nobody who is coming out to address the customer. The investor is suffering. The stock exchanges just talk to their brokers and tell them to update the customers.
I think that is the biggest learning that has come out. Total lack of communication by the regulator, by the exchange or by the government and no empathy for the end customer who is paying a heap load of taxes. We are making such a hullabaloo about 67% of petrol price being as taxes, but nearly 75% of the transaction cost of the investor is taxes and nobody is willing to address that as it is too small a segment.
We will figure out how to recover from technology disaster but it is this lack of communication which is a bigger issue. It caused a lot of uncertainty, especially a day before expiry with margin positions rollovers to happen and a lot of alogs not being able to perform.
I think you will agree with all the points I have raisedAbsolutely and yes the whole point is 4-5% of the population is investor population. It doesn’t really matter. I remember one time, the finance minister of that time came on your channel and said everything is fine and interested parties are causing this news, there is money in the ATMs. So even with banks the powers that be are bothered. Nobody is really bothered about the stock market. It may be too small a contributor in terms of votes but in terms of the country’s image, in terms of capital raising, in terms of confidence in the capital markets, it is a very big contributor and a day today is not welcome.
Again I am not blaming the exchanges. These things will happen but the communication chain was very necessary and some empathy. I am getting a lot of messages concerning the digital brokers. Since they had hard stops for intraday positions at 3.25, a lot of intraday positions were not getting squared off and then at 4:15, intraday positions got squared off at outlandish numbers. So this 1000, 1100 point increase in Bank Nifty is not the real story. It is more that within a 15-minute time period, a lot of intraday leverage is going out and people will make huge losses today unfortunately which they cannot go to anybody to make good. It is your own luck that it happened today.