The Crash( 17.5.2006) and FII activities since then

[nkpanjiyar]

Hi All Members

At this stage when market is responding with ferocity and relicating each fall in the world market with more vigour and zeal, tradeji has suggested a retracement level up to 50% of previous upmove which started in june 2004.
That level is somewhere around 8580. So expect the worst and be ready to pickup pieces to rebuild again.

The twin towers were lost because weigth of the falling debris and heat became too much for the foundation to withstand. With every fall in indices sentiments wil take a plunge and people sitting on the sideline would try to exit as it becomes mass exodus. That is when FIIs and others will speed up tha pace. The moves next week will decide whether Long Term remains or goes for a toss.

But be sure, a great buying opportunity is on the way , don't let it go, since nothing else will change in the economy. Interest rates will keep fluctuating. Inflation will be there. companies will continue to do their work. oil prices will go up yet vehicle movement/transport will not stop. People would continue to work. Money will keep moving from market to market. As long as market reflects the economic growth there is no cause for worry. But if it fails , it will risk marginalisation meaning long term bear market. However that possiblity is not yet there.

If members followed the discipline of trading and investing they would weather this crisis also and any crisis in future as well. This itself is enough to protect you form vagaries of the market.

Before we see any substantial up move , world sentiments need improvement.
FIIs will gather their pace of buying when last lot of beneficiaries of great bull run rush to market to offload in a mass exodus. That is what we have to keep watch and pick up pieces to rebuild again.

May God bless you all

Pankaj

Great words Pankaj. Again mantra is Wait and Watch. Caution friends.

Thanks,
nkpanjiyar

 

[pkjha30]

Great words Pankaj. Again mantra is Wait and Watch. Caution friends.

Thanks,
nkpanjiyar

Hi nkp

Thanks for kind words.

We have derided cnbc india operations. But their web site did provide some useful informations. I have culled out details of FII activities since Jan 1999. According to it FII are net investor by Rs. 155000 crs . I have marked net sale for a month in red. What is immediately gets noticed is that when our market tanked FII sell was at its peak. Immediately after that they have resumed buy activity(in net). Scale of operation has increased over the years. In May 2006 they were into massive sell off. abt rs. 8500crs. In June 2006 they are net buyer for rs. 1100 crs.
In oct 2005 also they were net seller by 3805 Crs.

In May 2004 they were net seller by rs. 3250 crs.

Overall they were net buyers for the year 2004 and 2005( also for 1999,2000,2001,2002,2003) In year 2006 they are net buyer by 10679 crs.

Also notice the scale of their operation and its swiftness. They sold massively in first few days of second week of may 2006 started from 12 th may and continued up to 26rd May. Thereafter it has abated. For five days from 12th May -26th May they have sold 23rd May they have sold off as much as Rs. 13030.03 crores as against net sale for the month at 7354 crs.(SEBI) or Rs. 8500crs(Moneycontrol).


If such a massive sell off will not tank the market then what else.

Moreover FIIs were permitted into F&O in 2005. So they were hedging their positions with their operations in Futures. index options as well as stock futures and stock options.

No wonder , members having learnt a lesson will keep tab on FIIs activity in Indian Operation in addition to TA and FA which fail in times of such massive manipulation. I think it can be easily said that other market participants were sold off by big brothers for a song. The whole operation has got camouflaged by the weakness in world indices. Our equities are being brought up by FII at dirt cheap while scared fawns are sitting on the sidelines afraid to venture again.

I will keep track as much as possible to keep members informed.

I don't think there is time to dispair. Keep vigil and be alert.
No loss is as great as a lesson not learnt.


Pankaj

 

[ucalegon]

FII turnaround likely?

From NSE+BSE data it seems like FII activity is showing some changes of pattern. FIIs sold (net) Rs. 12,400 cr. in 17 continuous trading sessions, with each day being net sales, between 10 May and 1 Jun. On Friday 2 Jun and Monday 5 Jun, they net BOUGHT Rs 1150 cr., and Tue and Wed was net sales of 282 cr.

The pattern seems to be that sales are slowing down. No hint of any serious investment though and in general volumes are about 25% lower.

What seems to be happening is that they are waiting for investors to panic and bring shares to phenomenally low valuations, specially the larger caps. Even Indian Mutual Funds are sitting on cash. Already, some companies are being valued very attractively, with PE's of less than 10.

If retail investors don't panic, we will see some of the Indian Mutual Fund cash come in - around 1000 to 2000 cr - at current levels. FIIs perhaps won't bring in large tranches of cash in the near term - they will stay silent till the next round of fed cuts I predict. But they will most likely stay invested and not sell much more going forward.

It's looking positive. Hang in there. In the long term what matters is only company fundamentals, and most of them doesn't look like a crumbling fort at the moment.

 

[rajesh.sadhanala]

Hi nkp

I have culled out details of FII activities since Jan 1999. According to it FII are net investor by Rs. 155000 crs . I have marked net sale for a month in red. What is immediately gets noticed is that when our market tanked FII sell was at its peak. Immediately after that they have resumed buy activity(in net). Scale of operation has increased over the years. In May 2006 they were into massive sell off. abt rs. 8500crs. In June 2006 they are net buyer for rs. 1100 crs.
In oct 2005 also they were net seller by 3805 Crs.

In May 2004 they were net seller by rs. 3250 crs.

Overall they were net buyers for the year 2004 and 2005( also for 1999,2000,2001,2002,2003) In year 2006 they are net buyer by 10679 crs.

Also notice the scale of their operation and its swiftness. They sold massively in first few days of second week of may 2006 started from 12 th may and continued up to 26rd May. Thereafter it has abated. For five days from 12th May -26th May they have sold 23rd May they have sold off as much as Rs. 13030.03 crores as against net sale for the month at 7354 crs.(SEBI) or Rs. 8500crs(Moneycontrol).


If such a massive sell off will not tank the market then what else.

Moreover FIIs were permitted into F&O in 2005. So they were hedging their positions with their operations in Futures. index options as well as stock futures and stock options.

Pankaj, really a nice collection of data which helps us to interpret. But after interpreting the data I can feel that every sell of FII there is double effect of the increase of the indices. The reason was pretty simple, they are investing in the cumulative manner. Whenever they are feeling it is over weighed they are creating a buy opportunity by massive sell off.

Please correct me If I am wrong in my interpretation, from the data how much the retracement maybe (66.6% or 50%) the upside effect would be too higher coz they have already invested too higher. I just want to correlate same with mutual funds so that we can understand how MFs tally FIIS.

No wonder , members having learnt a lesson will keep tab on FIIs activity in Indian Operation in addition to TA and FA which fail in times of such massive manipulation. I think it can be easily said that other market participants were sold off by big brothers for a song. The whole operation has got camouflaged by the weakness in world indices. Our equities are being brought up by FII at dirt cheap while scared fawns are sitting on the sidelines afraid to venture again.

I will keep track as much as possible to keep members informed.

I don't think there is time to dispair. Keep vigil and be alert.
No loss is as great as a lesson not learnt.

Pankaj

Thanks a lot for ur excellent efforts. Really appreciated. You are simply helping us a lot of people with wonderful piece of information. A long term player can really derive his strategy very nicely from here on.

Regards
Raj

 

[pkjha30]

Hi

Here is the FII data

FII trading activity on NSE and BSE in the Capital Market segment(In Rs. Crores)
Date--- Buy Value--- Sell Value--- Net Value
8-Jun-2006--- 2387.14--- 2407.84--- -20.70
AS per NSe details FIIs are net seller by tiny amount or Rs. 20.70 crs.

Let us see SEBI figures

Reporting Date--- Gross Purchases(Rs Crores)--- Gross Sales(Rs Crores)--- Net Investment (Rs Crores)--- Net Investment US($) million at month exchange rate
01-JUN-2006---- 1730.90--- 2563.20--- (832.30)--- (185.20)

02-JUN-2006---- 2317.80---- 2600.00---- (282.20)---- (62.80)

05-JUN-2006---- 2179.10----- 1538.60----- 640.40---- 142.50

06-JUN-2006---- 2088.40 -----1517.40---- 571.00---- 127.00

07-JUN-2006----- 1800.20---- 1715.40--- 84.80--- 18.90

08-JUN-2006---- 2052.50----- 2020.60----- 31.90---- 7.10

The above report is compiled on the basis of reports submitted to SEBI by custodians on 08-JUN-2006 and constitutes trades conducted by FIIs on and upto the previous trading day.


Well by SEBI's own estiamtes FIIs are net buyrs in India marlet by Rs 31.90 crs. That means their total buy operation is in excess of 52 crs.(to take into account deficit of NSE+BSE)

Now our market is tanking by 4.6% and FIIs who say it is overvalued are buying it??? I at least don't understand it.

For the month of May 2006 they were massive seller by Rs. 8500 crores. In attached document we have seen the massive sell off to the tune of Rs 13030.03 crs from 12th to 26th May( 14 days) In two weeks they have effected the value change by over 30% yet they are buying it. MFs have turned into net sellers which won't allow sensex to go up.

If only we new immeidately what they were buying into. As czar said it would be like writing exams with books.

Well Rajesh coming to the first part of your interpretation, the first question would be what stocks were they selling. As fixation is on sensex obviously they were selling lot of sensex stocks(??)so sensex got a tumble. Further if they are selling naturally others will also start selling so more pressure will be created which inturn would create more pressure as more selling at lower level will materialise. Its kind of self perpetuating machine.

How it gets stopped?? Only when a perception of strong value buy emerges. How?? That is when FIIs are into buying in a big way and into sensex heavyweights. So that sensex moves up and TAs get their three or four or whatever number of white candles.

When it would happen?? I suppose when PE gets around 10-14 in respect of Sensex stockes they will buy into it. Then what are they buying now. My guess is that there are many stocks which would make sense buying and keeping for a two year perspective. Further they are also hedging their positions in sensex stocks by buying stock futures and stock options and selling index futures(so that it remains depressed).

So when people realise what happened down the line four month from now( by second quarter results) much psychlogical built up would have happened and cows will be ready to be milked.

How far sensex will go down?? No guess. May be 8560 or something like that.
The imaginary support lines will act as maginot line. The only hope is for FIIs to again signal a change. That is what I am waiting for. The buying by them by itself is not enough. As they don't want retails to come in now. Once FROGs start croacking it will be time for that. Four of the FROGs have spoken

Goldman Sach has give PE target of 11-12 on par with Russia
Maryl lynch sayes it might go down to 8600
JP Morgan says value looks interesting for sensex but they need to correct more for buying to come in.
UBS has also given target for 8650( remember it was banned for May 2004)

FIIs can easily jack up the prices as we have already seen. So it might be possible that upmove could be sharp. But I doubt it . The reason being any climb up will witness sustained buying by the left out inorder to get out of the loss positions. Once this supply of stock all the way up to 12869 will have to get exhausted before sharp upmove comes in. So be careful in selection of stocks. Penny stocks pinches more. Go back to basics and keep the list ready. If you already had good stocks average them especially sexsex heavyweight. You may not get them at attractive valuations for a long time to come. I am positive that more than one year's gain can not be frittered away by FIIs. Still their overall pull out of money constitutes less than 4% of entire holding.

They believe in our story. Do we believe ??

Pankaj

 

[gandharvashu]

Nice said Pankaj

Do we believe?

 

[pkjha30]

Hi Rajesh

Here is MF story


Equity (Rs in Crores) ---Gross Purchase---------Gross Sales------Net Purchase/ Sales

April 2005-March 2006----100389.30----86083.64-----14305.66

April 2006.--------12752.47----9631.91----3120.56

May 2006.---------18345.43----10452.07----7893.36

June 2006 (upto 7th)----1700.27---2576.81-----( -876.54)



Well for last year upto Mar 2006 they made purchases of 14305 Crs.. In april2006 it was 3120crs and in May 2006 it was 7893 crs. almost half of what they did whole of the year. If we add April figures it adds upto around 11000 crs for two months alone. Ahha White night insigning armour?? Are they. Now they loose apetite and go for business sense seeing the weakness in the world equity market. The sell for Rs. 854 crores in one weak of June. Good god. Its not FIIs but our own MFs which are selling to FIIs our hard-earned small investors money as if money managers have got it in dowry.

First they try to prop up with our money(not mine as I believe that I am more intelligent than those money manager hence I manage my own.) then they sell so sensex tanks further.

Ever heard of Raja Jayachand who betrayed Prithviraj resulting in......


Pankaj

 

[Czar]

I think its more important to watch their derivative trades, the way daily they are buying or covering stock furtures & index futures says a lot... shorters be careful as a trap is being laid... I bet my a$$ today they have done massive massive short coverings & our poor retailers wont know what hit them when the trap is set... like in april none got a whiff of how they sold out more than 8K cr now now one will get a whiff as may was an illusion...cause they sold 7.5Kcr in cash & bought 7Kcr in derative, but see the june derivatives:

Index futures = +548.97 cr
stock = 1738.19 cr
index options = 360.53 cr
stock options = -55.2 cr

Total = 2592.49 cr + in just 6 days, tadaa...think about this... its very obvious...

 

[pkjha30]

Hi CZAR

FII DERIVATIVES STATISTICS FOR 08-Jun-2006
--------------- BUY---------- SELL ----------- EXCERCISED ------- ASSIGNED -------- OPEN INTEREST
------------ Amt in Crores- Amt in Crores--- Amt in Crores --- Amt in Crores- --- Amt in Crores
INDEX FUTURES--- 1926.90- --- 1733.18--- 0.00--- 0.00--- 8875.50
INDEX OPTIONS---- -104.91---- 53.33 0.00--- 0.00 - -- 1928.76
STOCK FUTURES--- 648.38 --- 208.97--- 0.00 ---0.00 ---- 9128.77
STOCK OPTIONS-- -- 0.00--- 0.00 - - 0.00--- 0.00 ---- 83.28


Well for June 8,2006 They are positive in all derivatives I.e. net buy. Even open interest is quite a significant amount 20, 000
crores. I noted similar figures but earlier they were net sell in index futures and net buy in rest of the three. Now they are net buy in all the four . Nothing is exercised or assigned.

I wouldn't know much about derivatives. I would request czar or some other members to interpret data.

I think bears will be made mincemeat by next week.May be just a wish. I don't know.

Pankaj

 

[pkjha30]

......Well in June open interest is not less than Rs.21,000 crs for FIIs. Same is the position for May and April 2006. Trojan Horse.

Sign of relief rally when mice pretending to be bears would be in mouse trap

Tell me more abt it czar and interpret for members.

Pankaj