The Dancing Sensex

Yes – the Dancing Sensex results into realization of dreams of innumerable number of traders and investors in the Indian equity market. It is really sexy to watch the northward movement of the Dancing Sensex – it is cool and cute! Perhaps it is like tandava and lasya combined!

There is, however, another side of the Dancing Sensex, a darker and a dangerous side. In the darker alleys of the world of finance, there may be something brewing in without the common knowledge. When the brewing boils up and spills out, many things may happen. The dark rendezvous coming to the light and becoming the common knowledge, may stop the frenzied dance of the Sensex. The northward movement, the rise of the Sensex is halted, and the fall begins. The Dalal Street becomes the first casualty with the crash having taken place.

When this phenomenon happens, the old time-tested saying is proved: The bull market has no resistance and the bear market has no support.

In fact, for last several months I have a feeling that the next fall of the Sensex shall be triggered by with the emergence of a new and novel fault: I have a feeling that one or a number of depositories, despite the best regulatory mechanism in place, may simply crumble down on account of misdemeanors and malpractices of certain elements. Many depositories have mushroomed, and some may not comply with all the regulatory requirements that shall give scope to such elements to indulge into imaginative frauds of gigantic dimensions.

As usual, the novice investors and new traders shall bear the brunt – in the course of multiplying paper profits, they may give more attention to watching their money bloat with paper profits, and shall forget to encash and encage the paper profits into cash! That will be a sad day indeed!