It was a zero-sum game for the retail investors who took leveraged positions in the derivatives segment.

The retail segment, who are referred as 'weak hands' in stock market parlance, accounted for derivative volumes worth nearly 65 per cent or Rs 16,59,333 crore (Rs 16,593.33 billion) in December alone.

Retail turnover clocked anywhere between 60-67 per cent in the last five months. In the two preceding months of October and November, their turnover crossed Rs 20,00,000 crore (Rs 20,000 billion).

"Investors who have provided shares as margins lost both the margins and the shares," said a senior executive of a brokerage house.

Typically, investors dabble in the high-risk high-return derivatives' market by providing their shares as collateral. When sharp falls occur, margin calls get triggered, forcing brokerages to sell the shares if investors fail to provide cash immediately.

Several smaller brokerages had no option but to sell their clients' shares to provide for margins. Marketmen said several bigger brokerage houses made stop-gap finance arrangement to pay the margins, in a move to retain the loyalty of high net worth clients when the market looks up.

This way, the brokerage houses ensure that clients' cash-positions (physical shares) are not subjected to distress sale. Clients are only required to make up for the losses, as early as possible.

"Through this route, several brokerage houses are trying to ensure that clients get out of this mess when the market recovers," explained a dealer.

Simply put, if the market recovers (and many think it will), the collateral shares' value rises, ensuring that the investors make up for their losses in derivatives.

However, this is also a high-risk game for brokerages. If the market falls further, the losses will mount, forcing them to sell the collateral shares' which may not make up for the margin losses at that point.

"The fact that several derivatives stocks have lower liquidity in the cash segment makes the situation worse. When margin calls get triggered, the fall is sharp. To make matters worse, the circuit (the maximum permitted fall or rise) limit in several of these stocks is either nil or much higher," he said.

On Thursday alone, the market was abuzz with speculation that several brokerage houses could face massive losses if the market falls sharply as they have arranged stop-gap funds to make up for the clients' losses in the crash of Monday and Tuesday.