|At the Internet Cafe, Day Traders in India Live Mumbai Dreams [WSJ]|
Mr. Mishra Ditched His Job And Doubled His Income;
A Wish for Ben Bernanke
By ERIC BELLMAN
June 21, 2006; Page A1
MUMBAI, India -- On the second floor of the Reliance Web World Internet cafe, behind a tangle of teenagers trying to kill each other in the network game Counter Strike, is another group of customers. They are older, noisier and glued to their rented screens.
"Hindustan Petroleum, sexy!" yelled Vinod Mishra, 38 years old, as he pumped his fist in the air, grinning at the flickering stock price of India's second-largest refining company. "My screen is like my wife. When it tells me to sell, I sell; when it tells me to buy, I buy."
While the former sailor sounds like day traders the world over, Mr. Mishra is a distinctively Indian type of investor. His office is this cramped Internet cafe, strewn with discarded paper teacups. At home, he doesn't have his own computer, Internet connection or even reliable electricity. His portfolio is tiny. His profit target is $10 a day.
"I'm not greedy," he says. "I just need enough to look after my family."
India's hot stock market has inspired many to ditch their day jobs and look for shortcuts to a better future. Online trading has more than doubled in the past 18 months to make up more than 15% of all trades on some days, according to the National Stock Exchange. Some 1.5 million Indians buy and sell stocks online, each trading an average of less than $150 a day.
But piggybacking on the stock market's historic run higher is no longer the no-brainer it has been for the past several years. The stock market has plunged 22% since touching a record high last month, wiping out $200 billion of market capitalization. That has squeezed a similar percentage of these tiny traders out of the market.
Gauri Vaswani, a real-estate broker turned day trader, says she has lost close to a third of her stock-market investment -- and a few good friends -- since the market started falling. She blames Federal Reserve Board Chairman Ben Bernanke for touching off a global selloff with talk of raising interest rates to combat inflation.
"I was stupid. I should have sold," says Ms. Vaswani, who moved to a new apartment two months ago so she could be closer to the Internet cafe where she spends her days. "Now I'm waiting for Bernanke to shut his mouth."
What Ms. Vaswani and many of her fellow traders haven't lost, is the bug. Many still hope to eke out enough profit from intraday movements up or down to change their lives in small but appreciable ways.
Other regulars at Web World left their low-paying jobs trading textiles and selling ayurvedic herbs to cash in on the unprecedented run on Indian stocks. Some have doubled their incomes.
Even with the market falling, Mr. Mishra says he makes more money buying on the dips than he could in his previous job selling engine parts for ships. There, the $6 a day he earned wasn't enough to support his wife, two children and mother, who live in a small apartment in the noisy suburbs of this city formerly known as Bombay.
He says he earns an average $15 a day from day trading. Mr. Mishra says he can now afford a private grade school for his son and daughter, a cellphone to call his brokers, a monthly movie date with his wife (a Julia Roberts film if one is showing) and still set aside some rupees for retirement.
So far he has been lucky in the market. When he loses money, it puts him in a bad mood for days but not out on the street. He refuses to even imagine what would happen if he started losing regularly. "I can't be pessimistic if I want to grow," he says.
Most Indians still earn less than $2 a day. Even someone with experience like Mr. Mishra, who fixed Navy ship engines for 15 years, usually makes less than $150 a month. He is like many Indians who want to get ahead but don't have the skills to grab one of the few good jobs as a computer engineer or the English to be a call-center employee.
Mr. Mishra grew up farming wheat, corn, sugar cane and potatoes in the fertile fields of Uttar Pradesh in northern India. He attended grade school under a tree without paper or pencils. Later, he graduated to a shed that students shared with cows.
Two years ago, he took $1,000 in navy pension money and began trading at Web World. Since then, he has doubled his take-home pay. Every morning he takes a crowded 90-minute train ride to downtown Mumbai and shows up for "work" at the back corner of the cafe before the opening bell at 9:55.
Web World charges around 25 cents an hour, hoping to earn still more from its coffee. It has squeezed more than 50 terminals into the ground floor of an old building at the center of the oldest neighborhood in Mumbai. With flat-screen panels and air conditioning, it's a noisy haven that boils over when nearby schools let out and the gamers arrive.
At 12:30 in the afternoon, Mr. Mishra empties his briefcase of its only contents: plastic containers of spicy vegetables and Indian bread prepared by his wife for lunch. The television set Web World installed for its most loyal customers -- the day traders -- is tuned to CNBC India all day.
The "trading floor" is filled with a constant banter, as each trader yells tips and taunts to the others about the money they made or lost and hot stocks they have found. One trader trades in his bare feet, while listening to tunes from the latest Bollywood movies. Another carries his trading tools -- a grimy calculator and dog-eared investment magazine -- in a plastic bag from a clothing store called Turning Point.
Each trader has his own tricks. Sumit Mehta, 27, who used to sell herbal extracts, looks for large trades by foreign brokerages and rides the slipstream. Neeraj Lohia, 29, waits until he sees the benchmark index bottom out, and then buys blue-chip growth companies. Mr. Mishra trades Indian sugar shares when there is overnight news about sugar production in Brazil.
Chairs and computer screens broken from overuse have been pushed to the corner. By the end of the five-and-a-half-hour trading day, most traders are usually a few dollars richer. Those who haven't figured out how to ride the market's current volatility were weeded out weeks ago.
Mr. Mishra says he continues to make money: about $17, he bragged at the end of a recent trading day. He says he has saved around $3,000 over the past two years. Once he has $10,000 in the bank, he says, he plans to start making larger and riskier bets on the market.
He has already used some of his earnings to rebuild his family home in the village he grew up in. He doesn't plan to go back there, though.
"It is giving me food, it is my provider," he says as he touches his fingers to his monitor, keyboard and then forehead in a Hindu sign of respect for his computer. "This is a 90% improvement to the life I lived in the village."