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Nemish's Nemesis?

Rediff Money Bureau

The ongoing battle for supremacy on Dalal Street has burnt away a fortune from many an investor's pocket. The big-ticket players on the Bombay Stock Exchange are said to be at loggerheads with each other. On one side is Ketan Parekh and his cartel; on the other side Nemish Shah, Vallabh Bhansali and their group.

Dalal Street sources claim Shah and his group started going short -- selling shares without owning them -- in Satyam Computers, Himachal Futuristic and a couple of other KP favourite scrips a week before the Budget. They started shorting Satyam Computer from Rs 4,000 levels and Zee Telefilms from Rs 1,300 levels. On Budget day all these stocks were hammered by the maximum permissible limit of 8 per cent.

The next day the Shah group was in for a surprise with KP -- as Ketan Parekh is known at the BSE's headquarters at Jeejeebhoy Towers -- re-establishing himself in full force in all his scrips. He pulled up Satyam Computers from Rs 5,000 levels to Rs 7,000 levels and Himachal Futuristic from Rs 1,700 to Rs 2,500 in a week. He was fully supported by retail investors who jump into a stock on just the mention of his involvement with the scrip.

Other leading brokers had also gone short. But the short side did not have a concerted effort. "They made a big mistake of operating individually without working in tandem when they took on the might of KP," says an observer of both groups.

One more advantage KP had in his favour is his retail fan following which he used to the hilt in this tussle for supremacy, the afore mentioned observer adds. Guesstimates stand at a minimum loss of Rs 300 crore (Rs 3 billion) this month alone for all parties individually.

This tussle had a cascading effect on the market. Brokers had to get out of their other stocks to finance their short position. They had to offload scrips like Novartis, E Merck, Rhone Poulenc and the like says a trader. Likewise, KP did the same to many of his second rung counters.

If this tussle had continued for a little more time, the short sellers would have been wiped out from the market. This would have resulted in a huge payment crisis. To prevent this, all the big brokers had a meeting in Pune the previous weekend and finalised a bailout.

A major payment crisis has thus been averted says a confidant of both groups. In this tussle KP has firmly established his supremacy in the market, but knowing Bhansali and Shah, they cannot be written off. Shah has returned many times from worse situations says a close observer of this group.

This tussle has knocked off more than a thousand points from the Sensex. For investors this is the right time to make commitments. The down side from here is limited to a maximum of 100 points says an analyst. It would be advisable for investors to go in for quality stocks this time as the market will be more selective.

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