It is close to 8.45 a.m. on Monday, February 28, 15 minutes before stock markets open for trading. The 24 feet by 8 feet dealing room of Religare Securities in New Delhi's central Connaught Place soon gets occupied by traders and investors waiting to make their money. The day is a oncein-a-year opportunity: Finance Minister Pranab Mukherjee will soon make his speech on the Union Budget 2011-12.
The overall mood is sombre given the high volatility in the stock markets over the last few trading sessions. Five minutes after the market opens, Chaya Arun, the Religare branch manager, steps into the dealing room to caution her six-member team about the market movements ahead in the day. "Budget days tend to be volatile. After touching 21,000 peak last year, there has been a continuous downward pressure on markets, which has dampened investor sentiments," she says. "While it looks difficult, especially after the non-event Railway Budget, we are hoping the Budget will lift spirits," she tells BT.
From one far corner of the room, Arun Kumar Gupta advises clients - taking turns at speaking into a phone and hollering across the room to day traders present - to buy into education and fertiliser sector stocks. His rationale: the government is fighting food inflation and will support the agriculture sector.
This could come in the form of higher fertiliser subsidies. Also, education is likely to top government's agenda, he reasons. In early trades, he buys Rashtriya Chemicals and Fertilizers (at Rs 82 apiece), Chambal Fertilisers (at Rs 71.20) and Educomp Solutions (at Rs 492).
Even as Gupta is bullish, another dealer, Kunal Nanda, is shorting, or betting a share price will fall - the State Bank of India, or SBI, stock. "Indices like Hang Seng, Nikkei and Strait Times have opened down; there's strong chance that our markets will slip into the red as well," he says, adding technical analysis showed the bank stock would slip further. At 9.46 a.m., with the Nifty at 5,404.6, up 101.05 points from opening, Nanda sells 1,000 units of SBI at Rs 2,611 each. And, just in case the share price goes up, he puts a stop loss request at Rs 2,630 - the trading platform will automatically buy back the stock when it touches that price.
The volatility of the past few days has the Religare risk management team cutting the trading limit of its clients on Budget day. The trading limit is the maximum leverage amount the brokerage is ready to offer its clients for buying stocks or derivatives. The limit is set daily based on market situation, value of securities and cash balance in the demat account of the client.