| Many brokerages, which had dealt with other meltdowns including the notorious one two years ago, are finding it difficult to explain the situation to their smaller clients. |
| "Small investors are completely taken by surprise," says Jigar Desai, a portfolio advisor at Angel Broking, which has a large clientele of retail investors. |
| "While many investors who have stayed invested for more than a year want to know if they should book profits right now, there are others who are concerned at the value of their purchases going down and being forced to book losses," he points out. |
| From the indications, small investors who could not thank the markets enough when they found their equity investments doubling in just a year, are now looking on with bewilderment at the fall. |
| Says Shashibhushan, head of the western India and Karnataka unit at IL&FS Investsmart, another broker with a large retail-investor base: "None of the damage till now has been owing to the long-term retail investor selling. On the first day was the metal sell-off. On the second, the damage was caused by margin traders who had gone long on huge leverage and had to exit positions in a hurry which took the entire market down. Once the value of shares were down, this also affected everyone who had taken leverage on shares, including loans against-shares. Banks started issuing directions to sell shares of such loans on Friday. The fact that the retail investor was not behind the meltdown is proven by the fact that mutual funds are under almost no redemption pressure despite the sharp correction." |
| However, faced with a situation where they are unable to explain the technical reasons behind the fallout, broking firms are advising their long-term clients to hold on. |
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