|From his home at Sarvodaya Enclave, a Delhi
borough, inveterate day trader Vikas Gupta, 35, plots his next
Klack on Qwerty. The furious pounding of the keyboard is interrupted
only by war cries of ''Archies 54, Carnatic 40, Rolta beecho (sell),
Infosys chaepo (buy)''. Cradling one phone, Bharat Gala screams
into another, eyes and fingers constantly dancing between the flashing
query windows popping up all over his screen and the console of
a telephone that is lit up like a Christmas tree. Four flickering
monitors have already made his five-by-three feet office unbearably
hot and it's only eleven in the morning.
SURINDER MIGLANI, 45, HOTELIER, DELHI
DAY TRADER SINCE: 1997
DAILY TRANSACTION VALUE: Rs 40-50 lakh
BEST DAY: Made Rs 4 lakh-plus on Reliance Industries
WORST DAY: Lost Rs 2-2.5 lakh on Zee Telefilms
INITIAL INVESTMENT: Rs 50 lakh
FOCUS: A-Group shares
TRADING STYLE: "Every time is buying
and selling time," laughs Miglani, who finds all he wants
to know about the market in the papers or on CNBC. He trades
in both small and large stocks and sells at margins as low
as 2-3 per cent.
With his prematurely graying hair and slight
paunch, 42-year-old Gala looks an unlikely mascot. Yet, mascot he
is for a bunch of hard-nosed speculators. Close to 600 people across
50 Indian cities log onto his chat-room every day, eagerly lapping
up the continuous stream of tips, technicals, and plain-old market
gossip he dishes out from his claustrophobic office behind the Bombay
Stock Exchange. It could be a cloth merchant in Mumbai, a housewife
in Kolkata, or a retired government employee in Jalandhar, all united
in their quest for the fastest buck.
Today, day traders account for over Rs 2,500
crore, between 70-75 per cent of current daily market volumes (National
Stock Exchange & Bombay Stock Exchange combined) making them
arguably the biggest force in the country's stockmarkets. If you're
a little unsure on who a day trader is, Mumbai stock broker Samir
Dholakia has a succinct definition. ''A day trader is simply someone
who doesn't believe in taking risks home, preferring to start every
day with a clean slate.'' No messy deliveries, no portfolio planning
strategies, just a tidy profit at the end of 335 minutes of frenzied
trading (provided, of course, you are lucky).
And Lady Luck is smiling. ''The last two months
have been boom time for day traders,'' says Chandan Desai, Head
(Equity), JM Mutual. ''Thanks to the threat of war, volatility,
generally restricted to few counters, has spread across the index.''
SANJAY RASTOGI, 41, ADVOCATE, DELHI
EDUCATION: B.Com, LLB
DAY TRADER SINCE: 1999
DAILY TRANSACTION VALUE: Rs 10 lakh
BEST DAY: Made Rs 2 lakh
WORST DAY: Lost Rs 4.5 lakh on Pentamedia
INITIAL INVESTMENT: Rs 30 lakh
FOCUS: Media and Communication stocks
TRADING STYLE: Apart from reading the
financial dailies, Rastogi surfs websites such as Myiris.com
and monitors the performance of companies similar to the one
in which he is considering an investment
THE DAY TRADER M.O.
Volatile markets get day trader adrenalin flowing.
The species basically makes money by exploiting small price imperfections
in shares-a few rupees, at the most. It doesn't matter which way
the market is headed, the more a counter (share) fluctuates, the
higher the potential for making money. Given their narrow spreads
or margins, day traders are always looking for large volumes to
buy or sell. Mitul J. Lal a paan-chewing 32-year-old cloth-merchant-turned-day-trader
swears by volumes. ''Latch onto momentum stocks; stocks with volumes
of 15-20 lakh per day and you're in day trader heaven,'' he exclaims.
Sectors don't matter. Nor do individual stocks. Yesteryear's favourite,
software, was dumped for old economy stocks like cement, steel and
infrastructure. Volatility and volumes, such are the simple needs
of most day traders.
Simpler, sometimes bordering on the bizarre,
is how most day traders make investment decisions. ''Tips, technicals,
and plain luck; in the same order,'' says Hasit B. Pandya, Director,
Twin Earth Securities. That's evident in the investing strategy
of Sanjeev Selvaria a 35-year-old Commerce graduate who's been into
full time day trading for the past seven years, sometimes notching
up volumes as high as 10 million shares a day. ''I buy them when
they're blue (denotes rising prices) and sell as soon as they turn
red (when they start falling),'' he says.
NAMRATA KANDOI, 21, STUDENT, MUMBAI
DAY TRADER SINCE: 2001
DAILY TRANSACTION VALUE: Not fixed
BEST DAY: Made Rs 2,000
WORST DAY: Lost Rs 6,000
INITIAL INVESTMENT: N.A.
FOCUS: Broad. Her aim is to gain an understanding of
TRADING STYLE: Kandoi believes day trading
makes sense only if the trader has a strong knowledge of a
company's fundamentals and the required technical (analysis)
If you find Selvaria's technique superficial,
take a peek into the innards of small brokerages dotting Mumbai
suburbs Borivali, Kandivali, or Malad. Phones ring incessantly,
orders are hollered out in a Marathi-plus-Gujarati patois after
furtive glances at a CNBC monitor. Groups of young men huddle seven-deep
around flickering BSE and NSE terminals playing ''follow the leader''.
The leaders are large brokerages, foreign institutional investors,
and mutual funds. When they buy, raucous day traders follow suit
and punch in buy quotes hoping the demand will push up prices. And
when the heavyweights sell, they do too, Graham & Dodd and value
investing be damned.
WHY THE FEVER CAUGHT ON
It isn't difficult to see why day trading caught
on. It requires little capital, limits the risks, even attracts
a preferential brokerage rate. Today, day traders can start off
with an initial capital as low as Rs 25,000. Brokerages charge anything
starting from 0.6 per cent for delivery based trading; for day traders
the charge is 0.1 per cent-a concession for bringing in volumes.
And even when they lose money, they do far less than what they would
have if forced to take delivery of shares.
BHARAT GALA, 42, TECHNICAL ANALYST,
DAY TRADER SINCE: 1996
DAILY TRANSACTION VALUE: Rs 30-40 lakh
BEST DAY: Made Rs 47,000
WORST DAY: Lost Rs 18,000
INITIAL INVESTMENT: N.A.
FOCUS: Broad. Aim is to maximise profits and minimise
TRADING STYLE: Gala relies heavily on
technicals and believes it is possible to make money in day
trading if you are disciplined. Problem is, most aren't.
Technology is also doing its bit to propagate
the religion of day trading. Today's day traders can trade from
anywhere they like-home, office, laptop, even mobile phone. Transparent
screen-based trading systems ensure that they can leverage price
variations of even a few paisa to their advantage. Market information
is everywhere-in financial papers, on the tube, and on personal
finance websites. Market data is also available in chat rooms, websites,
bulletin boards, and other online sources of gossip, and analysed
with a bewildering array of tools-all in real time.
As interest in day trading grows, companies
keen to cash in are launching products tailor-made for day traders.
Mumbai-based Sharekhan.com has sold 300 copies of its trading software,
SpeedTrade-within two months of its launch. ''It provides streaming
quotes, instant trade confirmation, streaming market info-depth
and data, price and research alerts all on a single screen-which
serious day traders are finding hard to resist," gushes Jaideep
Arora, Executive Director, Sharekhan. With everything so easy, is
it any wonder the day trading virus has caught on?
VIRUS IT IS
If international experience with day trading
is anything to go by, there's a significant other-side to the phenomenon.
As the nasdaq composite plummeted and Wall Street fell out of love
with dotcoms in 2000, fingers were pointed at many bow-wow traders
who had hyped obscure technology stocks to stratospheric levels.
Despite the current craze for day trading,
opinions differ on whether it is possible to make money. ''At the
end of the day, day trading enriches only brokers who benefit from
the higher volume of trades,'' feels Hyderabad-based K.S. Krishna,
Vice President (Marketing), Heritage Foods, and an active day trader
K.S. KRISHNA, 42, VP (MARKETING),
HERITAGE FOODS, HYDERABAD
DAY TRADER SINCE: 1997
DAILY TRANSACTION VALUE:
Rs 40-50 lakh
BEST DAY: Made Rs 8 lakh
WORST DAY: Lost Rs 6 lakh
INITIAL INVESTMENT: 1-2 lakh
FOCUS: A-Group sharesMNC, Pharma, FMCG, and TMT
TRADING STYLE: Krishna follows the age-old
philosophy of "selling on good news and buying on bad
news". Technical analysis and a spot of independent research
help him stay ahead of the market.
But die-hard enthusiasts like Gala, whose Mumbai
firm makes more than half its revenues from day traders, say a disciplined
approach-focus on few shares and sell to cut losses if the need
arises-could help even an investing ingénue make some money
from day trading. ''Even a capital of Rs 1 lakh to Rs 2 lakh can
generate Rs 30,000 per month,'' claims Gala.
P.S. Salvi, a bearded 49-year-old former central
excise employee, would vehemently disagree. He has seen his entire
capital of Rs 1 lakh being wiped out. A wiser man today, he advises
all small-time investors to stay away from day trading. Echoes Namrata
Kandoi, a bubbly 21-year-old student who trades from the Mumbai
suburb of Borivali, ''I find it risky and speculative; sometimes
I have taken positions in companies like dcw and itil without knowing
what they do.''
Many conventional brokerage houses consciously
stay away from day traders even at the cost of forgoing huge revenues
that they bring in. Manish Shah, Senior Vice President, Motilal
Oswal Securities, believes that in the long run less than 2 per
cent of the day traders make money and prefers to ''concentrate
on long-term portfolio clients instead''.
It is definitely boisterous and brash, maybe
at times bordering on the irrational. But for die-hard day traders
winning or losing doesn't matter, it's the buzz that keeps them