Folklore

What happened in capital market in past 2 weeks is a tragedy. Huge correction made bearish change in mood of investors in India. Even in this hot moment, a hilarious story made people laugh out in dalal street. I read this story in this week's business today. The story goes like this:

 

A businessman camped in a village and announced that he will buy their monkeys at Rs.10. He also said that he want 1000 numbers of them. People started selling their monkeys to him. After few weeks, its hard to get supply of monkeys in market, so the businessman now decided to raise the price tag to Rs.20. This doubling has helped in getting few more and the story continues like this. Everytime when he hike the price, he will get some supply from the market. After subsequent increase, the price has come to Rs.50 for one monkey. The price tag looked attractive, and people were ready to sell their monkeys to him, but they had none. On this moment, the businessman left for his hometown and before leaving , he appointed an assistant to take care of his business and monkeys collected so far.

 

The assistant looked at the inflated price in the local market, devised an idea. He called all the people in the village and announced that he will sell the monkey collected so far at Rs.35 to all people, so that when the businessman returns back, the people could sell them at Rs.50 and take home a hefty profit of Rs.15 for nothing. This offer looked very attractive and everybody bought back the monkeys at much higher price than original price. After that, both businessman and his assistant were never seen in the market. What's left in the village is nothing but all monkeys- not just they sold- but a hoard of people too.

 

The businessman is none other than FII's who came to the market and the people are none other than retail investors like you and me. The monkeys are synonym of the equities traded in our capital market. Now we are left with equities with huge price tag and no buyers to buy them, hence market correction and sensex crash.

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