You are here: Home » Markets » News
Business Standard
Web Exclusive

Markets are paying the price for not banning short sale; crash due to panic

The rundown on the market today is largely due to the players who are more speculators rather than investors in the global markets

Deven Choksey 

Deven Choksey
Deven Choksey is managing director of KR Choksey Investment Managers

I don’t think the have over-reacted with the hitting lower circuit today. On the contrary, I think we have not reacted much to the developments. The worst part, according to me, is that when the global are melting, our government and regulators were not at all prepared for such a situation.

In my view, the rundown on the market today is largely due to the players who are more speculators rather than investors in the global And they have free entry and exit from our markets under the garb of a “free market”. This is a cause of worry.

China did put in place measures to curb such a thing. As soon as they got a whiff of the epidemic, which has since become a pandemic, they immediately closed and stopped short-selling, put in heavy margin requirement and restricted the entry of traders in the market. All this was done last month. They are still a $144 trillion economy and have saved their investors from bearing the brunt of the health scare and its impact on the economy. On the other hand, India and the other nations have not done that. We are paying a big price for not doing all this.

The markets are paying the price for not banning short sale. Friday’s fall is not based on fundamentals, but on panic. This is also due to compulsion. There is capitulation happening in the markets right now. Capitulation is a stage when the liquidity dries out. And that’s why the markets are tumbling.


Deven Choksey is managing director of KR Choksey Investment Managers. Views are his own.

(As told to Puneet Wadhwa)

First Published: Fri, March 13 2020. 10:32 IST
RECOMMENDED FOR YOU