The Crash( 17.5.2006) and FII activities since then

[pkjha30]

Hi

The kind of huge gyrations that markets are showing is a definite sign of sickness. Normally such mood swings are associated with psychological instability and leads to drastic actions from individuals. They need care and counselling. Similarly, such swings , worldwide, leave alone sensex, indicates that uncertainty has builtup to such an extent that people want to cover their losses in double quick time and say goodbye to market till firm upmove is in place.

Anothe factor is that in downswing people don't enter the market for fear of loosing more.In upswing they enter irrespective of fundamentals for the fear of being let out of the party.

Investment is not gambling that we make 3 times or 10 time in three months time. You have to enter after proper study and thenwait for gains to accrue.
The metality to treat market as casino will lead to such gyrations. Treat it with respect it deserves.

Amitbe does not appear to be convinced. The global scenario is such that it does not warrant such optimism when changes are not even in place.
I tend to agree as common investor.

Those for long term should be in a position to see some downside to their portfolio before any move up. Risks are inherent factor of market and is minimised by diversifying, investing in sound stocks at proper valuations that you are comfortable with.

Market certainly need consolidation at these levels before it reflects growth story of India and not to run ahead of itself. Many have lost fortunes because they got attracted to market like fireflies due to leveraged positions and with the promises of overnight gains.I hope at least members would have learnt some lessons and invest or trade prudently with due diligence.

Pankaj

 

[pkjha30]

No goodbyes for you,my friend.......you don't get to escape that easily.Many here enjoy this thread and looking fwd to many many more posts from you.

You were never a nightwatchman from the beginning,.........more so now after all the triple and double centuries you've scored over the last few weeks.

All the best and looking fwd to many more!

Saint

Hi Saint


thanks for your kindest words. I don'y know if I deserve that.

I was always watching from the sidelines when market was running without loosing its breath. And enjoyed posts by esteemed members like you and amit and others. But the distress I saw from others was too much to bear. I am no analyst or trader or had any serious interest in the market earlier. But as a generally aware individual I have known that, come what may , market will grow if country grows. I still believe in that.

So during this period when sun was behind the clouds, I thought better to put my ideas across. Of course in many ways I was taken aback by the response and enthusiasm. I have now realised how much study and effort goes into your's amit, nkp supratik karthik murthy and everybody's post.I only sincerely hope that this website, which has so much of warmth and comraderie, sense of belongingness, continues to be the leading light for all investors and traders and its members enjoy the prosparity.

I would only request all of you to continue posting as much as time permits.A novice like me should only get inspirations.

Pankaj

 

[srinivasud]

Hi Saint

I would only request all of you to continue posting as much as time permits.A novice like me should only get inspirations.

Pankaj

Hi Pankaj,

Really you are great man. I am learning a lot your thread since it is started.

Srini - London

 

[pkjha30]

Hi srini

Now you are embarassing me. I just shared a piece of my thinking.I hope you have streamlined your portfolio by now.

At this stage I tried to look for red everywhere an I saw all green signals whichever direction I looked. You know what happens when all directions ahow green on an intersection.So better to let it cool off. people seem to be in the market for what czar told sweet revenge. It is beyond common man like us. So avoid it.

Therer is another contra line of thinking. You sell when everybody is buying and vice-versa.

As of now market was in oversold condition so this was expected. Even a slightly better than forcasted news will bring investors to the market.

Another point is Market is still in the selling mode as liquidity concerns, oil prices , inflation etc will not go away so soon. So for a period of two months we should be in slow investment mode and on first sign of trouble we must protect our profit.

For a long term investment, I feel that we are in uptrend.So it may be buy on pullbacks.Further never time the market and don't try to find the bottom in the water. You have to hold your breath longer and there is danger of oxygen running out.

In any case , this month should point to the direction we will move in.

Merril Lynch is stated to be negative on India.
HSBC has put buy rating
Ramesh Damani feels it is a bear market.


"Emerging-market stocks headed for their biggest rally in two years after U.S. Federal Reserve Chairman Ben S. Bernanke said the world's largest economy can withstand higher energy costs."

Well investors of the world are alike.Driven by herd mentality.

Evening we will see how FII friends are engaged in today as their action will give much clue to what happened in the market.


Pankaj

 

[pkjha30]

Hi

Here is Nse Data
FII trading activity on NSE and BSE in the Capital Market segment(In Rs. Crores)
Date---- Buy Value---- Sell Value--- Net Value
16-Jun-2006--- 2784.36 2185.23 599.13

And the Sebi Figures
Reporting Date---- Gross Purchases(Rs Crores)---- Gross Sales(Rs Crores) ----Net Investment (Rs Crores)---- Net Investment US($) million at month exchange rate
16-JUN-2006 ---- 1564.00 ----1424.10 ----139.90 ----3.10

And our MFs
Transaction Date----Gross Purchases----Gross Sales----Net Purchases / Sales

15.06.06----461.75----449.93----11.82

Yesterday they were net buyer in nse+ bse and again today they are net buyer. Looks like their mouth is not where their money is.


This may have been understood by investors. But what if they continue to do massive selling in India and rest of the world is having rallies. We don't know the answer to this question.Our market has moved pretty much in tendem with world market but on an enhanced scale.Such gyrations are naturally to cause worries.Interrelations of world market does not seem to work on the basis of assumptions of Analysts.

why I say that.

America is worried about inflation and fed rate hike and oil rate. Japan wants to suck liquidity out of financial system. Emerging markets(EM) became very risky

With fed rate hike treasury bond will become attractive. So money will flow from the EMs to these non risky instruments.
As economic growth rate is slowed down by fed rate hike and oil orices american expenditure will get reduced since they believe in spending now and earning later. So export from EM to USA will suffer.

This will affect the earnings of EM companies. Hence smart money will fly to better heavens such as Latin America, Russia and China.

Well Russia is ruled by Mafia. They don't speak English.

China is stated to be overheated and is likely to slow down. That will affect world commodity market. So commodity prices will go down. Hence there will be flight of money from these sectors.

If EMs don't solve their fiscal problems they will slow down.Oil will also reduce their profitability.

Japan is going to raise interest rate for the first time from 0 % to whatever in last 20 years in order to kickstart the economy. Liquidity will be sucked out by BOJ so less yen will be available to fuel speculations in emerging market.Now that their man at the Bank was caught cheating , some talk of postponement is heard.

American balance of Payment problem is so huge that it will cause recession on a world scale. First casualty will be EM.

these are in nutshell the arguments.

Let us see for what they are.

These arguments don't recognise that there is a real growth taking place in EMs. They are not able to come to terms with this simple fact. In factWorld economic growth hinges on these emerging markets and not on already saturated USA and decadent EU or overworked Japan. They have exhausted their potential.

EMs including India is a growing market in their own right. Just imagine ig 30% of Indians have mobile, the market will be greater than USA with each have three or four mobiles. This applies to all sectors. If we construct DAMS power plants roads bridges transmission transport services sectors etc.

Why American Multinationals are coming to India. Top five telecom companies are rooting for BSNL tenders.IBM , MS AMD siemans and the list is endless.
Once Reliance applied for GSM spectrum Qualcomm ( CDMA) chief is coming running to India.

We have to believe in ourself then only we will realise that arguments are specious.It is designed to hurt investors and make money. Inspite of all these concerns all market moves in tedem as if these factors will benefit all of them positively. If money is coming EM way USA market should suffer. If japan money becomes dearer it will make so for japanese first. Suzuki and HeroHonda and Yamaha are examples of initial Japanese investment. They might decide to shift to India to cut cost. Inspite of all this FIIs have taken out only less than 4% of total investment out of India and will come back again.

Ultimately if we participate the depth of market will increase and there will be less volatality. The participation, what I am talking about, is not day trading or leveraging but real investment.Not speculation but growth. We have long distance to cover and we will by God's Grace.

Even if market dips or meanders for another six months it will ultimately go up.There is no other way for a long long time. In this episode what I learnt is to watch the FII money flow and you know how market is going to react. At micro level if we see which company, we can easily outsmart them . Afterall their source of analysis will be deciding their investment and their investment will decide the prices. They are market movers for the time.

So keep a close tab on them.But don't let them fool you.

Pankaj

 

[Czar]

Hi

Here is Nse Data
FII trading activity on NSE and BSE in the Capital Market segment(In Rs. Crores)
Date---- Buy Value---- Sell Value--- Net Value
16-Jun-2006--- 2784.36 2185.23 599.13

And the Sebi Figures
Reporting Date---- Gross Purchases(Rs Crores)---- Gross Sales(Rs Crores) ----Net Investment (Rs Crores)---- Net Investment US($) million at month exchange rate
16-JUN-2006 ---- 1564.00 ----1424.10 ----139.90 ----3.10

And our MFs
Transaction Date----Gross Purchases----Gross Sales----Net Purchases / Sales

15.06.06----461.75----449.93----11.82

Yesterday they were net buyer in nse+ bse and again today they are net buyer. Looks like their mouth is not where their money is.

So keep a close tab on them.But don't let them fool you.

Pankaj

1 thing I dint understand dada the sebi figure says they bought net less (maybe off market deals) but how is the gross buys & sells greater in bse + nse greater than Sebi's... am I missing something ?

 

[pkjha30]

1 thing I dint understand dada the sebi figure says they bought net less (maybe off market deals) but how is the gross buys & sells greater in bse + nse greater than Sebi's... am I missing something ?

Well I put the raw data. Sebi says it is open to correction once all deals are reported. I put more reliance on nse+bse data. Though some of the off market deals get reported only after a weak or so. At least NSE figures give days transaction which is a good barometer.

Pankaj

 

[Czar]

thanks dada

 

[pkjha30]

Hi

To keep watch on the global cues.

Dow and Nasdaq open at par and slid to negative territoy and currently showing weakness.



Except Brazil other two indices in Latin America is showing weaknes.

Europe is red and profit booking has set in.FTSE opened in positive territory and promptly slid in red near closing bell on account os profit booking.


So all positive sentiments will vanish in a jify and people will rush to book profit. AS USUAL .

It should push sensex back by 3 to 5%.

These gyrations are going to continue. It is behaving like an adolescent.


Take care and wait. don't yet commit on any upswing now. If It is down only by few points or sustains in positive territory then .....


Else fall will again test the so called bottom I suspect. Global cues being very neutral to negative. FROGs are yet to croak convincingly. The moment they say it is risky investors will take flight.

FIIs are now not going anywhere. That is for sure. but they want our shares at cheap rates. Once supply dries up and bulls and bears are put alike through wringer to squeeze out last ounce of resistence then only it will be released.

But rest assured they are firmly in and this is no bear market. It is going to consolidate around this level before resuming upward thrust.

Another theory. The exponential curve of sensex flight took it to vertical trajectory where it was turning uopn itself so velocity dropped down and slowly it is coming out of loop before it takes anothe loop which will be at higher altitude. Target of sensex at 15000 by FY2007 is not yet violated.

I have two stocks which have exhibited just this pattern. Their Low was higher than 52 Wk high of FY05-06 in recent correction. Its funny to see me worrying when it would croos its 52 Wk high again and then it simply sails past and the in this massive correction makes a low which is higher than its previous high.One story was already told. That has not yet buckled as it had logish consolidation.

Long Term invsetment keeps you BP in control.

Pankaj

 

[Czar]

dada 1500 by 2007, mere bhi dada nikle...

one more question since you are the FII pro: Is there anyways we can check how & where the $ reserves come & go... cause since last 2/3 weeks our reserves have been dropping $2 bn weekly but the fii's are buying, so where is the $ going ?