Featured, Market Watch

Traders Market, Not Investors !

Published by Octron on August 24, 2009

Despite the good profit news from almost all major banks; the market is not getting any boost whatsoever, instead is dipping into red zone day by day.

Simply quoting the big players (who owns more than Crore’s Ruppees worth Stocks);

“SCB aroused greed & NABIL injected fear.”

The announcement of SCB bonus shares & dividend brought back investors into the market to trade for the blue chips. But, the announcement of NABIL bonus shares (50%) couldn’t lift up the market instead it just dragged the complete banking index down. Investor who bought NABIL, EBL, NIB, HBL even before NABIL announcement started fearing about the future price of other ‘A’ class bank. Two major questions were arising in every investor’s mind, which is hindering them from trading;

When one of the most established banks like SCB & NABIL is giving mere 50% Bonus (Dividends below 80%, don’t matter much for blue chips) what can be expected from other banks ?
Despite announcement of such huge profits & good bonus (50%) shares couldn’t raise price of SCB & NABIL above 10%. What will happen to other banks, which are far below these giants in terms of profit, size, establishment or goodwill?

It’s like a deadlock situation in the current market;
At the one hand, investors who are trapped in above dilemma are not buying anything but trying to sell everything they have at HIGH PRICE. On the other hand, traders (big players) are not willing to raise the price bar of the scrip’s yet, until they don’t fish enough blue chip scrip’s to make substantial profit. So the HIGH PRICE which investors are expecting could not be achieved and eventually, panic attacked investors are ready to sell their shares at traders price. Meanwhile, small players (who like themselves to be called Kheladi’s) are trying to raise the share price intermittently during the session by trading small volume of shares among themselves at high price. Unfortunately, they forget in a Sea, it’s the Big fish who swallows small fish, not the vice versa.

Currently, traders are busy speculating various news in the market in the form of investors in the broker’s room, online forums or paper media to snatch blue chips & quick money maker scrip’s;

Most banks have already achieved required paid up capital, so whats left for them to give us now? Dividend ?
Some self claimed Market Analyst (Never heard of them) on TV and newpaper: The market is finally correcting itself. Why should NEPSE go up , when all banks give is low dividend (at most 50%, out of Rs. 100) ?
Does anyone actually know the real numbers behind those UNaudited financial reports ? why take risk by believing those UNAUDITED figures ?
Last but not the least; Politics. Who doesn’t hate politics ? So its always an easy target.

Traders are cashing upon all the above speculations, while investors, who thought of harvesting good return by selling high after declaration of financial reports (& bonuses) are left stranded in the middle of dilemma desert – SELL OR BUY?

I suggest all readers to read previous posted article by Mr. Rajesh Sharma – Gaijatre Index & Its Anatomy for better insight into current market. For your ease, following are the article list;

Experts Advice : As Warren Buffett says; Simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

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