No Longer Rich Overnight
The question is has the market, for you and me, changed beyond comprehension? Or is it simply that a highly institutionalised stock market is injurious to the health of ordinary investors? Or is it that only the rules have changed and the rest remains the same? Or is it just a boogey raised by those asset managers?
In short, is the market safe enough? One day northward-bound, the next day to the dumps, its course of journey has become a sort of puzzle for investors. Out of sight, those self-serving institutions are discreetly playing their part in the game, of course, to fill their coffers. Says SV Prasad, CEO, JM Mutual Fund, A small investor will feel out of place in the market today. The reason: A high capital requirement. For instance, If you want to own two bluechip scrips, you should have at least Rs 50,000 (Rs 250 for two lots of 100 each).
With the secondary market out of reach, those with light purses have to turn to the primary market. For what? To amass as many junk issues as possible? No kidding. Look at the legacy of the IPO boom. Most of them will fetch you nothing. A lot of money went into the hands of promoters who had little idea about what to do with it, adds Prasad.
True, the investors are willing to sell them. But where are the buyers? Galbraith, your theory has some holes. Says Samir Arora, chief investment officer, Alliance Capital, Even at huge losses, there are no takers for these shares. Enough of the past. What do you have in the primary market these days? Fund managers are unanimous that very few quality issues have come up lately.
Moreover, the 100 per cent returns, on which the boom had its base, is no more even a distant possibility. Says SC Bhatia, MD, ICICI AMC, People must put the idea of getting rich overnight out of their mind. Today, at the very outset, the primary market remains insipid. If at all an issue worth a second look comes along, it will be oversubscribed many times over. This again coupled with the proportional allotment system will mar your prospects of securing allotment. Again, explains Prasad, only people with a larger corpus at their disposal stand a chance here.
The unpredictable market is a perennial cause of concern. The pitch is queered by the institutions or the ebb of domestic players. In fact, it may seem that it is the institutions -- both domestic as well as foreign -- that control the scrip movements. However, this is not true. Says Atma Ramani, CEO, Tata mutual fund, The market is really flat. There are neither institutions nor individual investors who can neutralise the FII activities. This is evident from the way the market reacts to FIIs selling.
What, then, does this all mean? That you as an individual investor should avoid the market scrupulously? Not really, replies Atama Ramani. They should realise that the market is and will get institutionalised. It has happened the world over, adds Prasad. As pointed out earlier, the final verdict is that