The Crash( 17.5.2006) and FII activities since then

yes i totally agree with pkjha30

even i think we will see 9800 tomorrow ie 2nd june 2006 n the markets will bounce back from there

the exposure of our banks will only be known if a problem occurs

hi pankaj,
well said
but don't u think v r still at the mercy of FII's(DOGS)? I mean it took the FII's to realise that India is growth story and start pumping money.I still remember reading a editorial in TOI in late 2004 or early 2005 saying" who cares for Sensex and how minuscule % of Indians invest in Stocks" etc etc
The Aam aadmi didnot get serious till Sensex crossed 9000.
why after Ambani patch up , udyan was sceptical whether Sensex will cross 7000.
unless Indians themselves start beliving in themselves and in Indian companies we , the small retail investors will remain Dogmeat.
regards
PS : just my views

Sorry to butt in but since this is a FII thread you may or may not consider this as my speculation...

I would say atleast 50% of fii money is really our darling ops money through mauritius / london... remember govt knows this but everytime the think about reconsidering the shutdown of maritius treaty...they are ridiculed by retailers cause the market tanks...recently the talk about banning 12 fii's was the same issue...how do you think KP had repaid his 130 odd cr. ? the mess is much bigger than the public realize...

you may think this as a rumour if you wish...

Hi

Though I hope but I wouldn't hazard a guess for the time being. As long as FIIs think market is risky they will pull out. Though I don't see extent of pull out as worrying as the swiftness of it. That itself has caused this much of correction. If buying does not pickup it will only slide further.

Yes it only means that we are bound to FII inflow.Though being slave is nothing but a mental condition of the person who feels like it. Whe we were under british rule we told quit india and after struggle we became free. Same thing here. The polisies must be examined in detail by all concerned including the last man down the line( the retail investors) and it should not curb FII monies but the speculative activity of unchecked kind. After all we all invest in market with some kind of speculation , be it bear or the bull.

Secondly people should also realise thw multiplier effect of leveraged trading or investment. Put and call ratios etc as we heard in the forums normally seems ok but at time it puts paid to all grandiose plans. Loans are recalled , unable to pay back many become pauper. Who are to be blamed. Tipsters. No the individual himself. One must judge the capacity to loose and to invest and also expect reasonable return from the market and not think in terms of mutibaggers as it clauds the judgement. Aam Admi doesnot know the market and all he cares is that it gives more than any other kind. But it is their money that gets sucked out. since they want only one line wonders. I am sure those who invested in 2004 after the crash would not have cause for worry though the returns would have become more rational and in line with expected rate of return.


Ye czar, exposure of banks will be known only after the problems. But the data available points to limited exposure perticularly tightening of norm after parikh scam GTB, and some cooperative banks. They are careful. Bank officers will not only suffer the loss for their bank but also their life will become miserable if caught. Govt can not bear the burden of public outcry.

What you said about Mauritius is something spoken about in whispers.But then I have also told that parallel economy constitute more than 40% of the money supply. So that may not be unimaginable.

Though I started it but I do not hold exclusive right to this thread. I place what I know and may be useful to somebody. But all are welcome to discuss the main idea and contribute any relevant information and yes they only have to decide what is relevant.. I am happy as long as it is read and commented. upon.


Pankaj

Hi

Just checked US market. Mildly green. Seems like same old story being played to find more suckers for their non story. Bond are down.

I still think this month is a wait and watch policy.

Pankaj

Hi PK

Some statstics....

FII equity investment data for the month of May

purchase - 47728 Cr.
Sales - 55082 Cr.

Net Investment : - 7454 Cr.


In MAY the net outstanding investments ( Buy-Sell) is -1630 Million US $
Total outstanding net investments so far 43585 Million UD $

Actually the MAY pullout works out to a mere 3.7% of the total outstanding investment.

So they have taken less than 4% of their Total investments. This raises many questions

- Is pulling out 4% of the total investments is a big crime. Soo much noise we are making. Orisit only the modus operandi that cpuld be blamed.

- If pulling out 3% can create such havoc, imagine if they pullout ..say 20%. Ohhh imagine the power they have over our markets..

- Should the RBI restrict the percentage of FII holding in the companies to just the initial 24%. Have we sold outselves to the FII. We shot ourselves in the foot and now crying Hoarse.

Just sharing a few thought. It will be intersting to see your comments

regards

Karthik

@Karthik: your post sends shivers done the spine :O

This is what I am telling for the benefit of those who think it is a start of bear market. It is quite insignificant.

What worries us is the speed with which it was pulled out. Big offloading is enough to drag indices lower. We all know that.My question is why they are still investing and still remain invested. The answer may not be easy. But as Amit said once It may be smart money moving in and moving out of the market with usual swiftness. If smart money is getting advantage of double taxation benefit or long term capital gains tax. Both somehow appears unlikely. Smart money can not have LTCG. Mauritius route benefit will have to be analysed in detail.

Ultimately I think our market has not yet attained that depth required to cushion this type of withdrawal.

No karthik , I don't think it is a crime. It is part of the well known strategy of FIIs and Smart money perticularly hedge funds. That is their mandate secured by law. The also need to earn money show returns etc. But if they go for F7N shorting then it doesnot gel with the Idea of Investment. This needs to be stopped. Czar will not be standing in front of the queue for the job as Govt. will ask him to give consultation on how to catch shortsellers on downticks.

Due to lack of depth they have this power. The answer is to increase the depth. But in any case there is no escape from cyclical nature of market. Regulation or no regulation.

Furthermore , reducing or increasing mindlessly FII limit without any concrete policy objective is going to serve no purpose. Nor will it be done that way.
One has to acknowledge that FDI and FIIs have put a premium on good companies, induced them to adopt corporate culture. Look even birlas now pretend to be corporate.It forces quality parameters, production and marketing effeciency. Many of the terms we were not knowing like SCM , ERP Corporate Governance etc have been brought by them. Now it is usual to see CEO or MD to hold press conference and give details about their earnings and future plans. It also makes them responsible to some extent. That has to extend to the shareowning public or retail investors like in western countries.


If nothing is wrong in FIIs investment and pulling out money(why they are not pulling out 20%..a puzzle) then it is still not a bear market. They do have power to influence the market and this could be one indicator signalling turnaround in the sentiments and ultimately. Let me be over optimistic to say that next rise of nifty will surprise by year end.

But ordinary investors don't hold the key as of now. So wait and watch.

Hope this is okay with you

Regards
Pankaj

Karthik,
No way can they afford to pull out more that 2 to 3 % over a 3 month period. This time the mutual funds flush with NFO money and LIC etc. on prodding by the power that allowed then to take out 4%. But if none of these had stepped into the market and joined in the selling then even a disinvestment of 2% would have brought the Nifty down to less than 2500 in a shorter period. Big money (including genuine and not so genuine FII's) cannot afford it. Their goal is to milk the market slowly but not kill the golden goose.