Indians learn market’s ins and outs

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.

As for his family, “they’re still a little suspicious,” Kamlakar admitted, even though one month he brought home an extra 2,500 rupees (about $60) from his new hobby, a 1.5% return on his investment.

“They say, ‘OK, show us a track record of six months, and we’ll talk.’ ”

Inside the stock market classroom, a nondescript storefront with three computers and little else, the dim lighting seems to reinforce the impression of a shadowy world. Students monitor the market in an almost reverent hush, ranged around the computer like devotees before an oracle, while alumni of the program drop in to check out the day’s stock activity or glean a tip or two.

Lately, the traders have kept their eye on power and financial companies. Moule, the manager, acts as a middleman for the students, working with a brokerage to process their transactions and distributing any earnings at the end of each month.

At 3:30 p.m., when the Sensex closes, there is a collective exhalation of breath. Everyone rises from their seats and stretches while Moule goes over to a blackboard to give a little primer on the day’s price fluctuations.

On a recent day, the exchange swung wildly, enough to make bigger investors and corporate honchos queasy with worry.

But for day traders, such volatility can be a gold mine. Their in-and-out-quick transactions are sometimes criticized as parasitical, because they add no value to stocks or goods or anything else, but Kamlakar doesn’t mind: He scored a 2% payoff that day.

“It was beautiful,” he said.

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henry.chu@latimes.com

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Shankhadeep Choudhury of The Times’ New Delhi Bureau contributed to this report.