The Bulls, Bears and Other Beasts: A Story of the Indian Stock Market

July and August had been bumper months for me. I netted Rs 41,000 in jobbing commissions in July and Rs 46,000 in August. And yet, I was disappointed for not having been able to hit the Rs 50,000 mark. Each month I took Rs 25,000 out of these profits home, depositing the rest with my employer, with the intention of taking bigger bets when the opportunity arose.

Bauji and Ma were awestruck when I handed them my earnings. Bauji had some idea about the stock market and its fickle ways, but he found it hard to believe that a 23-year-old could make Rs 25,000 two months in a row.

‘I hope you are not doing something wrong, Lalchand,’ he told me one evening after dinner.

‘No Bauji, every rupee has been earned the hard way. And this is just the beginning. With my efforts and God’s grace, we should be able to move to Ghatkopar in two years’ time,’ I said.

I could understand his concerns; my wayward ways during our days in Bhandup were still fresh in his memory.

‘But tell me, Lala, if you can make Rs 25,000 two months in a row, you could also lose that much, isn’t it?’ he asked.

‘True, that’s why I pre-decide the quantum of loss I can bear and stay within that limit. If I exceed that, I am likely to get fired from my job,’ I said.

Unlike me, moving into a bigger house was not Bauji’s priority. Satish had enrolled for BSc that year as his HSC score was not high enough to get him seat in a good engineering college purely on merit. And we lacked the resources to pay for a seat in the management quota. We could have just about managed that, but Bauji was not certain if the investment would be worth the money. But now that I was making decent money, Babuji saw a chance to realise his cherished dream to see at least one of his children become an engineer.

***

Thanks to my unusually long winning streak for the last couple of years, people in corporate circles began to know me. By that, I mean executives on the treasury side, such as chief financial officers. I found some of the fund managers too becoming more approachable now. Thankfully, since most of my gains came from short term trades and not long term investments, I was unknown to the media. I was perfectly fine with that since I had no desire to be known beyond my professional circles. I slowly began to get invites to parties of the rich and famous, which I refused without a second thought. Promoters began to send feelers to me to help boost their share price in return for a cut. At times, there would be offers to hammer a rival company’s shares. I had been approached in the past too with such requests, but the pedigree of companies that were now seeking my services was a few notches higher.

I have helped quite a few promoters to ramp up their stock prices, but as a rule I never invest in their shares. I have to trade in their stock for a certain period when I am managing its price, but my association with the stock ceases once I have fulfilled my commitment to them. It is good if promoters are mindful of their stock price; that way they may not want to do something rash that will upset the market or their key shareholders. But it is a problem if promoters are obsessed with their stock price. To me it is a clear indication that they are not focusing their time and energy on their main business. And that is a recipe for disaster. Promoters often forget is that a healthy share price flows from the strength of their core business and not the other way round.

***
On February 11, the Sensex topped 6,000 for the first time ever, but closed below that psychological level. That was a Friday, and we celebrated the landmark over drinks at the Harbour Bar in Taj Mahal Palace overlooking the Gateway of India. There were about a dozen of us. After the third or fourth peg, everybody present agreed that the market was absurdly overvalued and that it was time to sell out.

After we broke up, Govind Bhai and I had a short stroll by the seaside. There was a slight nip in the air, even as winter was in retreat.
‘You know, Lala, every time people attend a funeral, they become philosophical and return home promising to become a better human being the following day onwards. But after a good night’s sleep they are back to being their usual selves.

Govind Bhai said. ‘I am sure the same goes for all those who tonight vowed to reduce their positions after a few pegs. If anything, they will buy more as prices rise.’

The following Monday, the Sensex hit a new peak of 6,150 intra-day, but again closed below 6000. By now the bulls were delirious with excitement and buying stocks at whim, confident that the index would hit 7,000 by the end of the month. I was surprised to see some of the most level-headed fund managers I knew behaving like traders out to make quick buck.

I am embarrassed to tell you what my paper wealth had grown to by the last week of February. All I will say is that it was substantial enough for me to have lost count of it.

‘Lala, has it occurred that you must have made more money than Shah Rukh Khan over the last one year?’ Monk remarked the day after the Budget, when a group of us had gathered at a restaurant. I mentally calculated my net worth, and was flattered to realise that Monk was right after all.

‘I never thought of it that way, but I guess it must be true,’ I said, both delighted and embarrassed at the same time. ‘Of course it is true, Lala. Tell me something, why are you still working after having made so much money?’ Monk asked with a grin.
‘For the same reason that you come to work every day despite having made more money than perhaps Sharukh Khan and Aamir Khan put together,’ I said.

My repartee drew laughter from everybody at the table. I thought I saw a flash of anger briefly flicker in Monk’s eyes before he joined the others in the laughter.

(Excerpts from 'Bulls, Bears and Other Beasts: A Story of the Indian Stock Market’ )

'Bulls, Bears and Other Beasts: A Story of the Indian Stock Market’ is written by Santosh Nair, published by Pan Macmillan India. The author is the editor of Moneycontrol.com.