Markets getting immune to FIIs ?

Just read something on the web which possibly explains the sluggishness of the markets irrespective of FIIs pumping in dollars aplenty. If this is anywhere near the truth, looks like we small investors are being taken for a jolly good ride. Read on.....

Quote---

MARKETS GETTING IMMUNE TO FII INJECTIONS 11 April , 2005

If you were an arm chair analyst and faithfully tracking FII inflows into the country, you must be getting balder like my analyst, Ritesh, who keeps a tab on the what the FIIs are up to in Manmohan’s India . Common sense says that the market rises on FII buying and if they are bit aggressive the markets really zoom. Now consider this . Since the beginning of this year the FIIs of all breeds and risk profiles have pumped in close to Rs 17,000 Cr and hold your breadth, the Sensex has just added 13 points since December 31st, 2004 close of 6492. No wonder Ritesh’s hairline is receding faster than the Himalayan glaciers.

To put things in perspective , let me tell you the Rs 17,000 cr that have been deployed in our markets in just about 3 months is higher than the annual inflows seen in any year between since the FIIs set foot in India in 1993 to 2002. No, the mutual funds are not the culprit. They too have been net buyers of Rs 2345 Cr this year. Then why aren’t the markets moving up?


One needs to look at the way money is invested and things would be pretty clear why the Sensex is still brooding. A quarter of the money so far has gone into the primary offerings. That leaves us with around Rs 13,000. Good part of this residual money is going to preferential offers and the balance is getting invested in the markets and that too through block deals. Who supplies in block deals? It could be a promoter, a large shareholder or a market maker ( read operator). As the FII appetite for a stock gets satiated in bulk through a block deal, the price does not move up. No wonder even a Rs 2,000 Cr block deal would not move the market, while Rs 20 Cr buying directly from the market could put the stock on a 20% upward freeze. The block deals give the exit to the operators. The markets would gain only if the operator decides to take his money to another counter, where he starts ware housing another stock for a block deal at a higher rate. To me the exiting of the promoters and the operators do not augur well for the markets, specially the mid-caps.

Mr.V. K. Sharma

---Unquote

This typicaly happens at major market tops when promoters, operators, etc (read Smart Money) start looking or exits.

__________________
Best Wishes!

Traderji

www.Traderji.com

Hi Jaideep and Traderji,
A faboulus posting.The same questions were pondering in my mind for a long time,but I was not getting any answers.Now I am getting somewhat a picture,though I won't mind saying that every thing that has been written has probably not entered my head.
Anyway ,I don't regreat much,too,for I am much junior to u all in this arena.Hope,I will be able to reach closer to al l urs forsights ,obviously with ur help only.

NB:If u kindly clarify who are actually promoters and operators,and their role in the Stock market,I will be obliged to u both
Thanks again,
Regards
joy_mitali

Excellent post,Jaideep. I always wonder about what the hell is relevant analysis. You can go mad analysing all the information that comes out these yesterdays. Only yesterday somebody told me about the irrelevance. That same person who is an active trader also told me the importance of tracking the asian markets and how they react to US markets. I didn't know it had such a strong bearing on the Indian market.Someone also said that one has to check whether the transactions are delivery based at the NSE website. Who has time for all that?

However I would not be too sure of this FII bit till we get a contrarian view. Let some FII fan like Ritesh also give his point of view. Great post neverhteless.

I love posts which generate some momentum, some volatility though I wish both of us could also have made our poetic contributions to something like this.

I hope someday some wise guy orients us on what exactly to analyse on a daily, weekly and monthly basis.

Marketing getting Immune to FIIs-:

Well I am happy for this post as it is tough to understand the simple point.
A fiscal year has completed and the results of last qtr are awaited to the most,
The label of most wanted script in the respective industry has already been made for this curent year.
New fiscal will start from new demands and supply for the industry and which industries remain the most favourites, and then their respective leader and samll medium size leader and further any creative or unique group in that group.
The stock market is not a local issue or state issue or national isse but it is definetly an international issue as exports and imports plus and minus give us the balance of payment if your country has positive balance of payment your stock market is the healthier one.
I hope i have added to your information to understand the stock market lastly when FII enter in big way you market has become more internationalised, rest the market intiial movement is its own when the ball is set for rolling and gains momentum then pumping in of cash then matters most,

To answer your questions joy_mitali, you would have to get the perfect answers from Traderji himself, the wizman in the field. What you'll get from me is a rough-shod & small-time trader's personal opinion. As I see them & understand them to be, promoters are the middle-men who promote & set up the block deals and operators are the sleazy ones, the bad guys (in my eyes) or so-called market makers (too holy a name for these guys) who engineer trades surreptitiously to move the markets in the direction they want. Invariably these block deals & extra market manouevres (read manipulations) leave us small fish panting for succour. Block deals are made & clinched but related scrip price movement either way is hardly noticeable & the sucker again is the small fish.

To respond to sh50 rather reverendly, I've said many times before in this august forum that T/A or any kind of analysis is upto that much only & no further. The remaining distance in any kind of prediction of the markets has to be done on one's knees & elbows, sniffing close & laying one's ear to the ground. In short, one has to use all of one's 5 senses + instinctive reasoning to look just a little ahead of the present. All this has to be done too fighting the strong ground swell of the Mob (read market sentiment), which may or may not be in the direction of one's own judgement. Happy trading all.

Basic issue is what is relevant info. If you want take a look at extract from trading rules book in this
http://www.traderji.com/investing-fundamentals/1977-relevant-analysis-financials.html

I see that almost everyone associates TA with market prediction- whereas what it does is to analyse the past and give a picture of the present (not future).Now once you decide what is the current status of trend/momentum it is 'your assumption' that unless we change course we are likely to continue in the present direction - something like say TA is a mirror and you make the judgement whether the reflection is beautiul or not- just as the mirror is not responsible for your judgement TA is not responsible or your assumptions - but it just goes on relecting the reality !

What you are trying to say is that"beauty lies in the eye of the beholder". Only problem is here the consequences of wrong judgement are not beautiful .
However TA mirroring the state of the market and reflecting current reality is absolutely right. One only wishes one could ask" Mirror mirror on the wall, who is the fairest of them all?

This is getting interestingggggg!!!!!! Getting a bit fairytale(ish) too. Who would've thought that Snow White & her wicked Step-mother would figure in this forum? Thanks here to kannam... for the metaphor & sh50 for the analogy to the "Mirror on the wall".

Coming to the serious part now & kannam... first. If T/A is not associated with market prediction (read also as scrip movement prediction), what in God's name is?? Please tell me. We're not playing expensive fun games with T/A software & the like, are we? Not me at least. One needs no T/A to tell one what the past was, a baby can see that with ease. What T/A does my friend is it helps you (if you want, that is) see how the present shapes into the future. That's what trends, indicators, oscillators etc., etc. are for, are'nt they?? Charts are the ones that tell you what yesterday was like & what today is like. You want to guess!!! about tomorrow, go & T/A your market or scrip. Correct me if I'm wrong my friend.

Now you my dear Wordsworth (sh50), your approving.. Quote "TA mirroring the state of the market is absolutely right.." Unquote... does'nt gel with me for the same reasons described above. I've said it umpteen times before in this august forum & I've said it again above in the last paragraph. Forgive me for disagreeing with you because you make a whole lot of sense almost always otherwise, your poetry taking the cake. Now, where's your verse my friend? Long time no see. There are other things besides TA you know.