MC Inside Edge: Silent’s preferred private bank, Calculator trims PEL positions, fund manager’s warning, algo traders' losses mount

Know about major deals and all the inner goings-on from Dalal Street.

Manappuram's shares were among the big losers on Thursday, tumbling over 8 percent. Rising gold prices were supposed to have been positive for this NBFC, considering that it allows people to borrow more for the same amount of gold. But the RBI’s directive to NBFCs to stick to a cap of Rs 20,000 while disbursing cash loans has come as a dampener. The  Honey-tongued former fund manager-turned-ultra HNI is said to have unwound some of his long positions in the stock.

The much talked about rerating in HDFC Bank shares is taking time, despite a strong fourth quarter performance. But market veteran Silent Investor is not backing down...yet. He is said to be accumulating the stock at declines. It remains to be seen if his acolytes share the same enthusiasm after having burnt their fingers. The easy part is to ride on the coattails of reputable investors, but the difficult part is to stay invested for as long as they do.

Shares of Piramal Enterprises fell for the fourth straight session and are now down 15 percent so far this week. The Calculator PMS fund, run by an ex-star mutual fund manager is said to have been a seller of the stock over the last few days. The bigger damage could have been likely due to the unwinding of positions by derivative traders. Concentrated bets in PEL futures aggregated to a little over 43 percent at one point in the previous expiry. That has now reduced to a little over 30 percent.

A veteran fund manager had an interesting take on the prolonged underperformance of HDFC Bank and Kotak Bank.

“People chasing momentum stocks and flavours of the season forget that even credible names like HDFC and Kotak can give zero or negative returns for a long time despite  decent earnings performance. Just think what can happen to many of the small and midcap stocks trading at ridiculous valuations when earnings failed to live up to the story,” he told this diarist.

Till recently it was thought that proprietary trading firms playing the options game using algos were immune to swings in the market. Chatter is that for all their sophisticated algos, many top tier algo trading firms have been regularly losing money over the last month. Market, the great leveller, as the saying goes.

Winning and losing is part of the game, but some brokerages funding bulge bracket individual options traders on the assumption that the juicy interest margins had limited downside are now getting anxious.

Traders are puzzled (and grumbling) at the exchanges’ decision to test their disaster recovery site again in less than four months. This has put paid to the vacation plans of many stock market players who were looking forward to the extended weekend. Chatter is that the move is aimed at ensuring that D-Street players put their vote where their mouth is, instead of cooling it in some hill station.