It was the speculative day-traders (who play stocks on a daily basis) and small operators who lost the most. Explains Motilal Oswal, chief MD, Motilal Oswal Securities, "It's the traders' greed and fear that led to the current panic. The average trader (operator) is not evolved enough to weather extreme conditions, both in terms of personality and access to cash." And that forced them to sell frantically like there was no tomorrow. Adds Joshi, "Traders must realise that rear-view driving is passe in today's market. Just because a particular stock has done well in the recent past doesn't guarantee it'll continue to do so in the future."
Sandeep Waghle, chief technical analyst, Angel Broking Services, sums it up succinctly: "After last year's bull run, winning had become a habit with common investors. It made them careless, reckless and cowboyish in attitude. They thought any stock they touched would turn to gold. So, when there was an initial fall in metal stocks (due to fall in global metals prices), there was complete disbelief. They held on, even purchased more shares, thinking this was temporary correction. Not expecting the subsequent wealth erosion that took place over the next few days, they were forced to sell at bottom-of-the-barrel prices on Black Monday."
