The Crash( 17.5.2006) and FII activities since then

[pkjha30]

They were very late learners if those crises exposed them to the risk of asset freeze. The sequestership order of 1941 covering entire continental Europe's assets in the US even when the US was not at war with anybody should have taught them this lesson.

Regards,
--Ashish

Hi ashish

I think they never learn as the same crisis has been repeated time and again till 1992.I am reading through these things and it is really enormous. Lessons are many and those countires are still coming out of it.

This was result of easy liquidity due to oil prices shot through roof. It sent importing economies into free fall which they tried to stem through petrodollars in American banks that includes names of CITI Bank, Chase manhattan. Morgan Gutney and many others. Maxico refused debt servicing for $80 billion dollars.

Next came Argentina and then Brazil. Debt repudiation became order of the day with Peru chile blivia, nicaragua following suit. The term coined for such countries were LDC-least developped countries.

The move threatened the financial system of America so much so that USA had to finance debt servicing. Debt Trap took new meaning. IMF had to play a major role in safeguarding the interest of Financial institutions at the same time trying to prop up these economies.

Their currencies became so worthless and inflation so high that they had to reissue new currencies several times.

Total time in crisis 1973 to 1992 with 80's being called a lost decade.

I think that situation is not here. But a false step and we could easily be done in.

Pankaj

 

[pkjha30]

Hi

Sorry for the delay. I was little busy elsewhere.

Heres the figure for NSE FII data

FII trading activity on NSE and BSE in the Capital Market segment(In Rs. Crores)
Date-- Buy Value-- Sell Value-- Net Value
29-Jun-2006-- 1707.82-- 1931.48 --(-223.66)

And SEBI figue


Reporting Date-- Gross Purchases(Rs Crores) --Gross Sales(Rs Crores) ---Net Investment (Rs Crores)-- Net Investment US($) million at month exchange rate
29-JUN-2006 -- 2084.50-- 2123.50--- (39.00)--- (8.60)


And MFs
Date----buy----sale---net
28.06.06---307.33 ---346.08---(-38.75)

So FIIs are selling when market is in uptrend. That way it will always come to lower level. Global cues are now that of fatigue and negative. Some of them are telling that EMs are still better bet. Others discuss different issues such as outsourcing job loss to foreign countries etc.


I will be brief. Stock market worldwide are waiting for Fed rate hike to get over with. Today is the D Day. This will be factored in tomorrow if any surprises are sprung on investors who are expecting 0.25% rise and already facotred in. Fed may do some hard talk and hint at future increase. In any case rates are likely to go to 6%.

Once this event is over people will get on with their work. Market will continue to respond to events as they come. I believe that a period of consolidation will follow. There may be some downside in the sense market may attempt to test recent bottom. But from now on it will be stock specific story.

Different stocks will resume uptrend at different time. Some may have been hurt badly if valuations are not supported by fundamentals and growth outlook. So be choosey and select your pick with cold logic.

Streamline your portfolio. Trach at most two or three sectors with two stocks each. There may be frenzied run in some but don't feel left out as such stories are to lure investors and trap them in bad deals.

See how many days a stock is traded, what was the volume. Don't believe the story behind sudden spurt in a stock.

Long term investment is about growth and value and wealth building and not about money making.

Track your stocks with indices and sectoral movement. If it shows promise then use TA to get in. and stay put. Keep a stop loss and follow the discipline. Period of holding should also be determined. If you reach your price and stock is going up trail SL. If you reach you price before time and it is showing sideways movement book your profit.. In any case protect your profit. More than 10% loss should not be allowed.


Pankaj

 

[Czar]

well well dada, your friends are playing games secretly, I calculated their derivate total roughly & they are net buyers in index & stock futures to the tune of 6039 cr... that means either they are covering their shorts or we are in for a mega rally anytime in the next 2 months....

 

[Czar]

So a/c for last 3 months in derivates:

April: -8000cr
may: +7000cr
june: +6000cr

this is derivates

cash:
april: +573cr
may: -7354cr
June: +759cr

 

[munchikana]

Interesting data mining from czar. Can we expect FROGs to croak soon? Remember one Hindi proverb. Elephant has got two types of teeth. Ek Khane ke liye our ek dikhane ke liye. What is being eaten is not visible to us. We are all busy admiring in the beauty(?) of "dikhanewala daant".

 

[pkjha30]

So a/c for last 3 months in derivates:

April: -8000cr
may: +7000cr
june: +6000cr

this is derivates

cash:
april: +573cr
may: -7354cr
June: +759cr

Hi czar

I think to fully understand their strategy we have to explore all the areas where they are invoved in: Spots, index futures, index options stock futures and stocks options and anything else. They will be setting us up for another round of trip to moon and back

I have very limited idea about last four. Either you give me a short tutorials in these things and how it operates and what situations give rise to what action or else you cover for that. A combined output is the basic idea behind every thread and forum.

I have read some reports which says there may be rally in July- August with downward trend in sep-oct thereafter big rally till march 2007. If by then Fed says no more hike then upto 2008 it will be a boom time. But by 2010 a fullfledged bear market. I think this idea stems from the cyclic understanding of market in a four year mega cycle and follows the analogy in American presidential cycle of boom and bust

After Reading lot of gloomy reports , I am convinced that we are really in a mega bull cycle lasting 10 years starting from 2003 till 2012 with, what Saint called ,intermediate downturn due to several concerns raising their heads at different time.

This may be the second opportunity( first one in 2004) to enter that sonic boom at its lowest point. This window of opportunity will be available for another two or three months at most before we get propelled into different league.


Pankaj

 

[karthikmarar]

Hi Pk


Here is an article dated 14th june about investing in India. May be irrelevant in this tread. But atleast gives a idea on the perspective of foreigners on investing in india..

http://www.investmentu.com/IUEL/2006/20060614.html

warm regards

Karthik

 

[pkjha30]

Hi Pk


Here is an article dated 14th june about investing in India. May be irrelevant in this tread. But atleast gives a idea on the perspective of foreigners on investing in india..

http://www.investmentu.com/IUEL/2006/20060614.html

warm regards

Karthik

Thanks Karthik
I wouldn't put much by what he says. Some facts are known and acknowledged and not hidden. Perhaps we can ignore the changes that are taking place and concentrate on hyping up negatives. He lives in America and he should read American History and also Colonial History to really understand what was America in 1950's and what was India from old times.Just a superficial understanding of Indian society by a second rate citizen in a foreign country wouldn't cut much ice.


This is what one of the forum had to say about KR
http://forum.investmentu.com/viewtopic.php?t=75&

sume you mean the "marketing literature" that Agora puts out to promote KR's investment newsletter.

Agora marketing literature is well known in the industry to be deliberately misleading. Personally, I don't know how they get away with it.

Pankaj

 

[rheinu]

US fed has increased rate to .25% and markets all over flying high......

But do this rally a true reaction..Last two months markets were going down fearing the rate hike..Now after the rate hike markets flying with joy as if gold raining on stock markets: tomorrow when we take positions seeing this trend next week may see steep fall..reason?? Rate hike and inflation. Same old story happened last time also.After last hike market went up and next day begin the crash.So let us forget todays rate hike and play towards what would happen by next fed meeting...

 

[pkjha30]

Hi

Finally, one much hyped event is over. Fed has done it for 17th time by raising it by 0.25% as anticipated. It has softened its stance on inflation but left wide open the possibility of further increases.

Next policy statement will come in July third week whne he gives evidence before congressional panel. Then In August and finally September.

The outflow of money from U.S. equity funds has stopped, according to Charles Biderman of TrimTrabs Investment Research. In the week ended June 20th outflows totaled $4.5 billion, but by the end of the following week, inflows and outflows had equaled out, he said.

"If today's rally continues through Friday, we would expect healthy inflows to return in July," he added.

"We have the potential to rally from our current oversold position," said Morgan Stanley technical analyst Mark Newton. "I'm more optimistic for the next month or two than I am for later in the year."

This means they have pulled out money from EMs. What happens if EMs also surges. Will the money come back???

So this has not really gone away. Prices were unsustainable so it found a vent to re;ease the pressure. Now the pressure will be shifted to three factors at least

1. Performance and guidance by the companies and comments of analysts.

2.Stand of Bank of Japan on raising rates so that global liquidity is tightened. That will reduce hot money chasing risky profit.At least it will sober the inflating sensex and expectation of across the board rise of stock prices will be moderated.

3. Moonsoon, oil prices and reforms.

Dow and Nasdaq couldn,t contain the joy of happening what was known since may 2006 and much hyped up. Of course if you give much spirit even sober dow will dance forgetting its past and the present reality.

India is certain to respond with wild abandon though I would wish it to show a mature response. A moderate rise.

Is today a time to buy? No

Market will go into consolidation mode for now and it will respond to domestic issues such as Monsoon forecast, oil prices and its impact on economy, pace of reforms , psu disinvestment, reduction in fiscal deficit. People should be watching for any signs of slackening growth and higher inflation, increasing balance of payment gap(Export- import-debt servicing etc).

Just a thought crossed my mind after Mittal won arcelor and GOI decided to disinvest 5% of coal india Ltd. May be one day in next five year we will see sail being handed over to private management like Mittal or Ticso(after a bitter fight) as Mittal wants to focus on India and china now. The two Good emerging markets.Any comments for and against is welcome.I have a feeling that is may be a foregone conclusion.Secondly , If mittal comes for acquisition spree in India then steel industry might see consolidation with mergers and acquisitions.

Second aspect is that GOI seems to allow FIIs to indulge in pure speculation at the cost of Indian investors. Such distress stories floating in the country would not do any good for increasing the market depth.

We should redefine the priorities and concentrate more on FDI rather than FII. Dtata in this regard is disturbing and can not be wished away. We have 75:25 ::FII:FDI ratio while china has just opposite.

FDI is a long term commitment and FII especially Hedge fund is till the first hour of the party. Second hour of the party is the exodus leading to such a fall.

I think now investors know the bottomline for indices.2632. Further any stcok whcih has fallen below its fundamentals and is grwoth leader or industry leader in a growing sector is a good candidate for watch list. If you have such stocks which are good, it may be worth averaging on a long term basis. Let me remid you that in all this brouhaha FII,s net sellout was limited to 4%. If you consider that as part of normal operation then the reaction to it was due to global factors and swiftness of withdrawal( any intelligent person would do to either book partial profit or protect profit and invest at lower rates.) FII net buy has decreased by anothe 200 crs thus June is around 600 crs net buy for FII. Today they may sell andother four hundred crs net or may be all or remaining net of sale and purchase. Now market will be able to absorb as many would rush to enter again for the fear of being left out.

Be patient. It is the time to watch and wait. You buy when market is down.Don't just give in to euphoric sentiments or depressive moods.

Pankaj