What an opening this morning? The stock indices, both Sensex and Nifty crashed by around 10% because of the new regulations proposed by SEBI on P Notes on Overseas Derivatives Instruments. The early morning itself gave some idea about what is going to happen in the Indian market with Nifty futures traded on the Singapore Exchange falling by more than 6.6%.
But to be honest, I didnt expect a fall of more than 500 points on the NIFTY and 1700 points on the SENSEX within 5 minutes of trading.
Now, the market is closed for one hour because of the market trading regulations. The rules of closure are as follows:
If the market crashes by 10% - closed for 1 hour.
If the market goes down further by 5%, - closed by further 2 hours.
If the market goes down by 20% in a day - then it is closed for the day.
What we can expect for the rest of the day?
The trading has been stopped today with very low volumes. It may go down by another 5% when it re-opens as there would be more sellers provided there is no clarificatory remarks from either SEBI or Finance Minister. There is also a possibility of the margins being invoked by banks due to this very big crash. It can accentuate the selling pressure. Probably, we may see for the first time the market completely closed for the day due to 20% fall.
Stocks which have gone up like crazy in the past month bore the burnt of the fall. Stocks like Reliance Energy, Reliance Industries, Reliance Capital, Tata Power, ONGC have fallen more than 12%. But the volumes are very low and hardly in few thousands of shares.
The intelligent stock pickers wait for a day like this and pick up good shares.