“The market is crashing because everybody has a gambling device in their hands. About 95 per cent of people have become legitimate gamblers with their mobile phones all over the world led by the US. It is like playing poker or teen patti,” says Kedia.
In an interview to ETMarkets, the Mumbai-based maverick investor, best known for picking midcaps at attractive valuations, says in the last two years crores of new legitimate gamblers have joined the market. “Trading apps have become like casinos. Even college-going kids and housewives have started to talk about technicals. They do trading courses and look at charts but no one talks about fundamentals. It is like a drug,” he said, adding that markets regulator Sebi must take steps to restrict F&O trading by new and small investors.
In the last few weeks, Kedia says he has met a CISF personnel at an airport who lost Rs 15 lakh by trading in futures and options and a school teacher who lost Rs 42 lakh similarly on leveraged money.
“Stock market will reward you as per your perception. If you treat it as a gambling den, it will prove to be a gamble for you. It (the crash) is the repercussion of all that. We are happy that 10 crore demat accounts have been opened, but out of them 9.5 crore are trading accounts – they buy today and sell tomorrow. Money making had started to look easy. People were behaving as if there was a lot of hidden money in the stock market and one could dig out money and go home.”
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Kedia said in a bull market beginners become geniuses, advisors, chartists and economists overnight but in a bear market geniuses, advisors, chartists and economists become beginners.
“Almost 95 per cent of people play blind. They don’t know the fundamentals. New people come like a child and after 1-2 trades, they think of themselves as an analyst,” he said.
The biggest casualty of this meltdown, according to him, would be new-age tech stocks. “They are behind this carnage. Their downfall has not yet stopped,” he said.
So when will the trouble end for investors?
“A new bull market will not come till the time euphoria converts into a crisis. When the market inches up a little, people think that it has reversed. This may last for a month or two. The market may make a bottom in the next 1-2 months. Bull markets are becoming longer and bear markets shorter. The new bull market will be led by stocks that did not participate last time,” Kedia said.