Banyan Tree to Dalal Street

We, human beings as a group, are realising the true value of trees rather vey late. Of course, one can always say better late than never. Trees are worshipped for a long long time in India and some other countries as well. Among the many trees, Banyan tree and Peepul tree are two trees that have fascinated and found value in human lives. Both belong to the broad "Fig Family" though not of edible variety. In India especially, both these trees are considered sacred and highly respected and valued. Peepul or Pippala or Sacred Fig as it is also called, is worshipped for various reasons. It is considered as very important in maintaining biodiversity. People travel far to see the "Bodhi" tree in Bodh Gaya. 

Banyan tree is known for providing thick shade and shelter to many birds and other animals. The accessory trunks that develop from prop roots help it to grow horizontally as well. The tales of the big banyan trees in Calcutta (Shibpur, Howrah), Chennai (Adyar) and Bangalore (Ramohalli) are well known. They have been tourist and picnic spots as well. Calcutta tree is said to have more than 2800 supplementary trunks. It covers about 5 acres of land! Adyar banyan tree is said to be five centuries old. As college students we have seen the fight scene of Dr Rajkumar in the film "Jedara Bale" (Spider's Web) some fifty years ago, filmed in the vast area of the Ramohalli tree.

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This is the season for filing Income Tax returns. Last date for filing is fast approaching. We still remember the times when one had to wait for years after filing returns for getting a refund from the IT department. Fortunately, good days are here for refund seekers. Nowadays refunds are coming within weeks of filing returns, There are also cases of the lucky ones who got refund within three days of filing the returns. This is most welcome by Non-Residents even more since they would have paid 31.2% TDS and plenty of withholding tax as well. 

Tax returns are generally filed by people who have incomes as it is "Income Tax" as the name itself suggests. But there was a very peculiar report last fortnight of a Chartered Accountant in Assam having filed an income tax return on behalf of a 3rd Year B Tech student. That in itself is no big deal. But the issue is that the boy did not have any income at all! Even with zero income he has filed a return. The secret is that he has suffered a loss of Rupees 26 lacs during the year 2023-24. How does a student who does not have income lose so much? He had incurred such huge loss by trading in F&O (Futures and Options) segment of the stock market! It has further been revealed that he had suffered a loss of Rupees 20 lacs last year as well on similar lines. 

Carry forward of losses is permitted in the tax laws of all countries to enable adjustment of such losses against income of the coming years. Tax laws provide for a maze of provisions for setoff of losses suffered in earlier years against future income subject to some monetary limits and time limits. The types of losses that are allowed and not allowed are also given in the acts and rules. This student may be able to adjust some of the losses against his future earnings, but it is most likely that he will not be able to cover all the losses when he has lost so much in two years. 

This is one instance that has come out in public. There are thousands who suffer such heavy losses by falling into the lure of making fast bucks using their perceived skills in forecasting things.

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A big banyan tree near Town Hall in Bombay (present Mumbai) did something more than all other banyan trees. It had a big role in the development of trade and commerce in India. When "The Native Share and Stock Broker's Association" was started in 1875, stock brokers met under this tree for the daily activities relating to buying and selling etc. In due course it got converted into Bombay Stock Exchange (BSE). BSE is now 147 years old. It remained the top stock exchange in India till the incorporation of National Stock Exchange (NSE) in 1993 and started operations a year later. BSE is presently housed in P J Towers in Dalal Street, Mumbai. Banyan tree to Dalal street has been a very eventful and historical journey for BSE as well as growth of trade and commerce in India. 

From the time brokers met below the Banyan Tree near Town Hall to present trading from the tech based trading platform, from the comforts of the house or office, many people have made fortunes below the Banyan Tree or P J Towers in Dalal Street. Probably even more people have lost money!

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Last Friday (19th July 2024) which also happened to be the 55th anniversary of Bank Nationalisation in India, Smt. Madhabi Puri Buch, Chairperson of SEBI stated that F&O segment has become a "Macro Issue" now. She expressed serious concern about household savings going into speculative bets and youth of the country are losing tonnes of money in these trades, The 3rd year B Tech student who has lost Rupees 46 lacs in two years is a classic example of such cases. 

NSE website says that it is the World's Largest Derivative Exchange in terms of number of contracts. Number of participants in 2019 was 7 lacs, This has gone up to 45 lacs in 2022, which is more than 6 times in just 3 years. This is a phenomenal growth in the volumes of trade in this segment. Number of contracts traded in a year is about 90 billion or 9,000 crores. This is a staggering number by any standards. Notional value of these contracts is said to be around Rupees 105,00,000 crores (105 lac crores!). The value of contracts traded in the F&O segment has doubled in the last one year.  Such massive surge in just one year is naturally a big cause of concern for the regulator. Another alarming factor is that 90% of F&O trades resulted in losses with average losses being Rupees 1.25 lacs.

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Last few months have seen massive surge in the BSE Sensex and NSE Nifty. Sensex has crossed 80,000 levels which was not even thought of a few years ago. Many experts wonder whether this surge is really backed by true value of stocks or based purely on sentiments. Lot of expectations is placed by markets on the budget of the Union Government to be presented in two days time.

Weather changes very quickly during monsoon times. So does the sentiments in the stock markets. Any steep fall will erode huge amounts of savings of small investors. We have learnt from the past experience that when there is a massive surge in a short time, it also has a potential for scams. 

We can only hope that all will be fine in the coming days and will bring more prosperity to small investors.