The Crash( 17.5.2006) and FII activities since then

mahmeds2000 · #**401** 27th June 2006, 04:40 PM

Quote:

Originally Posted by pkjha30

Hi Ahmed

I am not the technical guy qualified to answer this query. But from what I saw is summed up below.

MSM tries to read the overall market sentiments by identifying number of positive set ups and the scale ranges from 0 to 400.Currently it is below 50 as stated by the site and not moving up. Clearly, market is not throwing up any positive signal on technical parameters.But a low score of below 50 also signifies that sentiments are at the rock bottom and will not move below much. It might be an indication of bottom building. So downside may not be much. As this process continues slowly , rest of the indicators will start picking up the positive signal and MSM will move up. This is a buy opportunity.

Now MSM could be applied to indices or to individual stocks. In bottom building ecerxice MSM of individual stocks will be more importan as overall sentiments turn neutral stock specific sentiments will go into positive territory. So buy signal will be thrown at different times for each stock.

I suspect that once FIIs and global cues are positive, MSM will slowly turn up giving buy signal.

Similar to this is one interesting concept :- Fatigue-O-meter. Who is wearying fast-bulls or bear. Bulls having long runs for three years are clearly exhausted and bears are fresh salivating with wild possibilities. So bearish sentiments will prevail keeping market depressed.

What do I think?There are no bull and bears in the current market.Only FIIs. If they decide to turn bear then we have it. Our retail participation is not such that to be able to withstand their onslaught. If they decide to turn bulls ,who's going to stop them. They have the muscle. We don't. If they are fighting among themself then it is a different issue. So far no evidence. All acting in unison. We don't have any desi bears at all . All are opportunistic clones.

In so far a MSM is just the outcome of all technical parameters, I wouldn't rely on it to read the real sentiments as technicals reflect market sentiments post-facto and not concurrently.MSM will suffer the same infirmities. If you keep too narrow a focus, like tick by tick chart or 5 miniute chart or hourly chart then it is good for that time frame only. We can not talk of general market sentiments.MSM will suffer or inherit all the defects from constituent indicators and may be magnified.

I found that The Hindu Businessline stopped giving technical advice for last one an half month.

Why? In extreme situations they don't seem to work properly as is true of any system based on certain assumptions which may not be valid in all situations.In extreme situations , factors causing it, FII and global cues , will be important in assessing overall sentiments and likely direction.

I request someone ,who is well versed in TA, to explain more on MSM as the above exposition would be inadequate.

Pankaj

Thanks Dada,
This knowlege about MSM is enogh for me. Now i am wating for tommorow FED meeting. many of my retailor friend saying FII's know in advance that what is going to be decided in the meeting. all my friend are from last 10 year in the market and i am only from last 10 month and i have seen two correction and learning from here only.
Also i want to ask what is the current PE of the sensex and nifty?

Ahmed

pkjha30 · #**402** 27th June 2006, 05:25 PM

Quote:

Originally Posted by mahmeds2000

Thanks Dada,
This knowlege about MSM is enogh for me. Now i am wating for tommorow FED meeting. many of my retailor friend saying FII's know in advance that what is going to be decided in the meeting. all my friend are from last 10 year in the market and i am only from last 10 month and i have seen two correction and learning from here only.
Also i want to ask what is the current PE of the sensex and nifty?

Ahmed

Hi

PE for sensex
Date-- Open --High-- Low-- Close --Price/Earnings-- Price/Bookvalue-- Dividend Yield

27 June -- 10,058.29 --10,224.26 -- 9,901.58 -- 10,151.01 -- 18.52 -- 4.18 -- 1.53

PE for Nifty

Date-- P/E -- P/B -- Div Yield
27-Jun-2006-- 17.36-- 4.44-- 1.57

Will comeback for more later.

Pankaj

amitt29 · #**403** 27th June 2006, 06:03 PM

Hi Pankaj,
This is in regards to post no 390,the SEBI data is of previous day.Everyday at around 5 SEBI has the previous days f2 equity data.And F2 dervative data.The NSE website has the current data.Hence the discrepancy.

pkjha30 · #**404** 27th June 2006, 08:01 PM

Hi

Thanks Amit for the info.

Here's the SEBI data

Reporting Date--- Gross Purchases(Rs Crores)--- Gross Sales(Rs Crores)--- Net Investment (Rs Crores)--- Net Investment US($) million at month exchange rate
27-JUN-2006--- 2161.30--- 2188.10--- (26.80) ---(5.90)
Total for June --- 34215.70-- 33305.80-- 909.80--- 200.50
Total for 2006--- 250128.10--- 238096.10--- 12032.00--- 2695.30

And NSE Data

FII trading activity on NSE and BSE in the Capital Market segment(In Rs. Crores)
Date-- Buy Value-- Sell Value-- Net Value
27-Jun-2006-- 1666.83-- 1727.17--( -60.34)

MF Activity

Date---Buy---Sale---Net
26.06.06---185.20 ---312.74 ---(-127.54)
Total for June2006 ---5955.99 ---8337.45 ---(-2381.46)
Total (April - June '06) --37053.89 ---28421.43 --8632.46

First the bad news. FIIs have been slowly selling. Though they are still in net purchase by 909 crs(SEBI) the amount has reduced. It has reflected the volatality of the market.

The good news is that they are net purchaser for the first half of the year by 12000 crs. They have to sell that much to get into red.As earlier noted the value of their holding will decline by much more percentage if they resort to massive selling like that of May 2006.

The way I see is that there is mood of anticipation and apprehension. In the run up to dreaded wednesday and thrusday , market analysis has been full of foreboding and ominous signs.

Asia -Pacific was largely green(except HongKong) but the margin of upside is unconvincing.Europe was partly in green by unconvincing margin and partly in red. FTSE was in red by 0.01%.

Dow and Nasdaq is currently showing listless movement and slowly sliiping into red.

This simply indicates that market is in wait and watch mood. Rocking the boat before time is not anybody's idea now.

Nifty closed little highe but one could understand the underlying weakness by the A/D Ratio
Advances--- 241--- Declines--- 675 Unchanged --- 20

For every advancing stock there were 2.8 stocks tha declined.Nifty PE is 17.36.Here advance decline ratio was slightly better
Advances 34
Declines 16
indicating a general bias towards Largecap stocks

Tomorrow market will remain listless, rangebound and volatile.Wait and watch. Let this event pass over and then try to gauge the direction.

While thinking one thing crossed my mind. Why it so happens that one stock is not a good buy when it comes down to say 90 but it becomes a good buy when it is 120 and going up. Fundamentally, what changes are there in both the situation. One thing is clear: Sentiments, secondly , any adverse outlook.
Ignore the sentiments. Go for Outlook.
Pankaj

pkjha30 · #**405** 27th June 2006, 10:59 PM

Hi

Since members have attached so much importance to Nifty PE, and I believe rightly so, I am attaching a chart and one file for Nifty PE since Jan 2004 till date.

I will give my interpretation like this.

The lowest pE was on 25the june 2004. at 11.96. Thereafter PE has been consolidating in a range for one and half year. Next lowes pe was recorded on 31st October 2005 which was 14.23. Now the lowest PE recorded was on 14 th june 2006 at 14.92.

At each time when there was significant price action on the downward side PE also took downward plunge. but in a higher loop. This is the third loop counting from the Low in 2004. Low of each loop is higher than the previous one. Thereafter it consolidates.

A PE of 14.92 and consolidating is not excessive if we think of the growth rate at 8.4 % per annum as against 3% of developped countries. I suppose PE shows where Money is. There may be risk but then you can't get more reward than the risk.

Feel free to post your views.

pankaj

munchikana · #**406** 27th June 2006, 11:10 PM

Quote:

Originally Posted by pkjha30

They have to sell that much to get into red.As earlier noted the value of their holding will decline by much more percentage if they resort to massive selling like that of May 2006.

Pankaj

I have been observing that you are repeatedly expressing the opinion that FII are not going to sell heavily as there is every possibility of eroding the net worth of their overall investment. Just one doubt over this line of thinking. By this time (whether we like it or not) FII are owning massive proportion of Indian equities listed on our exchanges. Any selling by FII is going to tank this market to a bottomless pit. The truth is that we simply do not have money to absorb even a portion of what FII sell. Just see what happens if they sell some Rs.7000/- Crores worth stocks in a month. When we compare it to their total holding, it is a pittance. Now imagine, what will happen if they sell at least 50% of their overall holdings. If they hesitate to sell for the reason as opined by you, will they ever be able to sell? Do you feel that they are going to hold these shares forever?

pkjha30 · #**407** 27th June 2006, 11:31 PM

Quote:

Originally Posted by munchikana

I have been observing that you are repeatedly expressing the opinion that FII are not going to sell heavily as there is every possibility of eroding the net worth of their overall investment. Just one doubt over this line of thinking. By this time (whether we like it or not) FII are owning massive proportion of Indian equities listed on our exchanges. Any selling by FII is going to tank this market to a bottomless pit. The truth is that we simply do not have money to absorb even a portion of what FII sell. Just see what happens if they sell some Rs.7000/- Crores worth stocks in a month. When we compare it to their total holding, it is a pittance. Now imagine, what will happen if they sell at least 50% of their overall holdings. If they hesitate to sell for the reason as opined by you, will they ever be able to sell? Do you feel that they are going to hold these shares forever?

Dear munchi

Tell me who is going to buy when they sell. We can't because we don't have absorbing capactiy. So what happens If they dump without corresponding buying.Stocks will hit lower circuits, meaning no buyers. So they are left holding a paper nobody is willing to buy. Further when they sell, do you think that majority of Domestic players including retail investors will be left behind.
Most likely our MFs would have been exhausted now or would exhaust in double quick time with run on them for redemption.

Finally , When the nimble few have left for other pasteurs , others including FIIs will be left holding a paper not even worth toilet paper. I do not think such a scenario works in their favour.

I don't think they are going to hold any share forever. They will be constantly looking to better avenues and rotate as their assessment of a particular stock changes. Sometimes they would exit in profit and others takeover from them. ( This happened in case of Airtel last year when one FII exited at 240 and another one got ito it, both ending in profit).They just don't dump. If it is a bear market we will see them exiting by the next year end while trying to protect their net worth on Indian Portfolio. So watch their actiona dn their words more closely.Further, if you see, I have expressed opinion on net sale and purchases. Individual buy and sale figures are much higher. In these figures story of individual stocks are hidden --what they are selling and what they are buying without impacting cost. This is a well known fact. Further they may resort to negotiated sale so that prices are not affected. Even exchanges now allow it as a seperate segment.

The problem comes when they sell more than they buy.

Pankaj

Czar · #**408** 28th June 2006, 12:49 AM

-ve's for the Fii & few reason to ventures pull out's with making zero value:

1) the falling Re. is doing more damage to fii investment than we are imagining

2) profit booking by 1 fii is going to trigger a chain reaction nobody will want to leave empty handed

3) what all observations by dada are failing to say is that if 70/80 % fii are long termers, like they buy & are here to hold whether there's bull or bear market for minimum 10/20 years (yes there are creatures like these)

4) that leaves with the hoards who joined the party late & they will pull out fast as situation worstens & believe me when I say they will pull out no matter what, see not all are worried about what dada mentions about cracking the market by pulling out, they dont care, if the scenario world wide is becoming gloomy, profit or loss, pull out is imminent...

5) loads of operator money which entered through fii mask will exit... they entered rigged the market & will leave when they decide game over.

many other reasons but I think these are sufficient to put enough gloom..

rheinu · #**409** 28th June 2006, 01:00 AM

well written Czar!!! Actually much of the FII money is itsself from India chanelled out and enterd through FII routes.Also there is very little chance of fresh FII investment coming because Indian Equity Funds abroad is now getting very poor response from investors like IPOs in India

Czar · #**410** 28th June 2006, 01:31 AM

yes rheinu, that fact I am tired of stressing, in fact I had made a special post about our ops & govt corrupt money coming thru fii route...

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