Savvy traders make hay in freefall

Bulk deal data shows several intraday trades squared off for huge gains

One man’s poison is other man’s meat. Even as Financial Technologies’ group stocks were being battered on Thursday, a few savvy traders were laughing all the way to banks. The Multi Commodity Exchange (MCX) stock is not in the futures and options (F&O) segment; therefore, it is subject to a 20 per cent circuit filter. However, as Financial Technologies is an F&O stock, it isn't bound to any daily floor or ceiling.

Therefore, on Thursday, amid the mayhem following the overnight suspension of trade in the group exchange, the MCX fall was arrested at 512.5 but the Financial Technologies stock, which began with about 30 per cent losses, continued to fall. This created opportunities for savvy traders in the cash market, who began selling at higher levels and squared off positions soon, after pocketing the difference. Such intra-day short-selling created a self-feeding cycle, which further pushed down the stock.

According to BSE bulk deal data, Marwadi Shares and Finance Limited sold 4,85,440 shares at Rs 246.87 each and then bought 4,99,331 shares at Rs 240.16 —the price difference in this transaction alone works out to about Rs 32 lakh. Crosseas Capital Services Private Limited sold 7,17,793 shares at Rs 254.6 each and bought 7,17,793 shares at Rs 242.66 each, the Rs 12 arbitrage translating into a gain of Rs 86 lakh. Similarly, K G Securities and Consultancy Ltd bought and sold 3,06,593 Financial Technologies shares, at an arbitrage of around Rs 1.

National Stock Exchange (NSE) bulk deal data showed a slightly mixed picture, with some traders burning their fingers in the intra-day volatility, while most others made gains. Those recording intra-day gains on bulk deals include APT Portfolio, Adroit Financial Services, CD Integrated Services, Global Vision and Way2Wealth Brokers. Brokers said apart from intra-day opportunities in the cash market, traders also exploited cash-futures arbitrage that emerged on the Financial Technologies scrip. On Friday, too, Financial Technologies continued to be the target of traders, with the stock falling to Rs 105.45, a 52-week low. However, it recovered significantly, amid buying at lower levels. It closed at Rs 153 on the NSE, a loss of 20.2 per cent.