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Indians learn market's ins and outs

Many of modest means have become zealous day traders, hoping for a path to prosperity.

June 16, 2008|Henry Chu | Times Staff Writer

PUNE, INDIA — As often as he can, Pramod Tharkude jumps onto a crowded public bus and makes the 10-mile journey across town to a dimly lit, sparsely furnished room that he hopes holds the key to prosperity.

Inside, the 31-year-old shopkeeper joins a handful of people staring at a computer as numbers flicker and dance across the screen. Now and then, someone scribbles a note in a small book or punctures the silence with a terse instruction to the man at the keyboard: "Buy."

They are avid day traders, small-time speculators who follow the tiniest fluctuations in Indian stock prices like hawks tracking mice, swooping in and out at opportune moments for quick trades that feed their wallets a few rupees at a time.

For decades in this land of 1.1 billion people, playing the Indian stock market, the Sensex, was the preserve of the ultrarich and institutional investors, who had the wherewithal to hire brokers and gobble up shares in bulk.

But those barriers are breaking down as India continues to post one of the highest rates of economic growth in the world. Boosted by breathless media coverage of the stock exchange's every wiggle, interest in the market is rising among ordinary Indians.

Technology, in the form of online trading, has allowed many of them to experience the joy of Sensex -- and its pain -- for the first time.

"I never thought I would be into this," Tharkude said one recent morning, reluctantly tearing his eyes from the flashing prices of stocks issued by big energy and banking companies.

Not, he hastened to add, that he has some special talent. Anybody who has "enough patience and time to watch the market every day . . . can do it," Tharkude said.

That is far from everyone, of course. India remains a desperately poor place for hundreds of millions of people more concerned with keeping body and soul together than with adding terms such as "closing price" and "selling short" to their vocabulary.

But for many working- and middle-class Indians with a head for numbers, a nose for opportunity and a stomach for risk, new doors have opened for financial rewards from a stock market that has exploded in value by more than 400% in the last six years.

When Tharkude started day-trading seven months ago -- a practice that exploits small, short-lived changes in stock prices -- a string of losses totaling more than $100, a hefty sum by Indian standards, made him leery.

Gradually, however, Tharkude got the hang of it, took in three times what he lost and bought himself a new television, which he keeps tuned to the CNBC financial channel. The rest of the profits have been plowed back into his family's general store here in Pune, a booming city in the west of India that is fashioning itself into an information technology hub.

Tharkude gathers with other day traders in the spartan office of Vijay Kumar Stock Market Classes, a company that teaches novices, for a fee, how to play the market. The firm began as a start-up in Mumbai, the former Bombay, three years ago but has expanded into a chain of six branches throughout Maharashtra state. In all, the firm has taught 5,000 students.

Eager clients in Pune have included retired civil servants, housewives, businessmen, factory workers and a security guard who never made it past elementary school but has developed a knack for day trading.

"In developed countries, 50% to 60% of people are involved in the share market. But in India, it's only 3% to 4%," said Pradeep Moule, the manager of the Pune office. "We tell them that they can start with a small investment of capital, but it can pay handsome gains."

The company's brochure features a cartoon figure being showered with money against a shaded montage of rupee notes in various denominations, all bearing the smiling visage of Mohandas Gandhi. No one points out the irony of using the face of a champion of simple, agrarian living to flog a business that promotes easy money through trading shares of multibillion-dollar conglomerates.

For a certain segment of society, Gandhian values, including a distrust of naked capitalism, still hold some sway. After 17 years of market-oriented reforms, the engine of India's economic boom, a whiff of greed and disrepute still clings to free enterprise and the stock exchange.

Amod Kamlakar's decision to start a plastics business four years ago was questionable enough in the eyes of his parents, particularly his father, a government employee. Dabbling in stocks seems even more unwise.

"Coming from a typical middle-class family, the stock market is not looked upon as a great career. The kind of scams we heard of -- the whole thing is put in a negative frame," said Kamlakar, 31.

He began day trading about four months ago. "Back in 2000, if someone told us that online stock trading would be possible in India, people would've said, 'This guy is mad,' " Kamlakar said.

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