The Crash( 17.5.2006) and FII activities since then

Brief Recap of History to refresh Memory

In the year 2004.... there was a month called May

1. SEBI allays fears of payment problems
The Securities and Exchange Board of India (SEBI) has said it does not anticipate any payment difficulties in trade settlements following the crash in stock markets. The assurance came in the wake of fears that many market participants may face .

2.RBI offers liquidity support
IN a bid to allay the fears of a payment crisis at the stock exchanges, the Reserve Bank of India (RBI) today announced that it would provide liquidity facilities to any of the settlement banks. When contacted, none of the settlement banks ...

3.Manmohan warns of stern action against 'perpetrators'
THE Congress-led Government-in-waiting today sent out a stern warning that it would act decisively to punish anyone found guilty of manipulating the capital market that could have perpetrated today's crash. ``We are not in Government. We do not ...

4.Can domestic FIs do the rescue act?
WHEN the markets go into a free fall, the Government often seems to look to domestic institutions to do the rescue act. But as drivers of market liquidity, domestic institutions still appear to be dwarfed by the FIIs. Just in four months ..

5.SEBI on high alert; warns of stern steps

IN the backdrop of the Sensex nosedive on Friday, the Securities and Exchange Board of India (SEBI) has asked stock exchanges to remain ``extraordinarily watchful'' of any unusual movements in the market. It has threatened to take stern action .

6.CPI(M) blames `bear cartel' for Sensex crash — Opposes profit-making PSUs sale
THE Communist Party of India (Marxist) on Saturday reiterated its opposition to privatisation of profit-making public sector undertakings (PSUs), while ascribing the 330 points crash in the Sensex on Friday to the operations of a `bear ..

7.Foreign broking firms turn bearish

FOREIGN broking firms have suddenly turned pessimistic on Indian equity market and changed their outlook particularly on sectors such as banking, power and energy. Their fear is that the new Government with Left parties support will go slow on ...


What was the reason for above statements


story continues......

drama goes on...


What was the reason for above statements

14.5.2004

Market goes into a tailspin — Reform blues impact; over Rs 1,00,000 crore wiped out

THE Day After... ..! It was carnage on the bourses. Stock prices fell like ninepins on Friday as fears of a possible slowdown in economic reforms and disinvestment, jolted the market. The brave face put up by the financial markets on Thursday .

14.5.2004

FIIs dump PSU, banking stocks

According to market chatter, they were net sellers of around $250 million-$300 million (around Rs 1,100 crore-Rs 1,300 crore) of equity. This is almost double Thursday's figure of $137 million (Rs 604 crore). Brokers said FIIs sold across the .

17.5.2004

Panic selling reduces Dalal Street to rubble — Erodes Rs 2 lakh cr; Sensex sheds 842 intra-day; trading suspended twice

THE spectre of "market-unfriendly" Left ideology having an overwhelming influence on economic policy-making at the Centre drove equity investors into a selling frenzy that saw the BSE Sensex fall 842 points before recovering about 300 points in ...

18.5.2004

Market recovers; sustained buying lifts Sensex up 371
MAJOR stock indices recovered sharply today on sustained buying in frontline stocks as panic-stricken investors were comforted by the settlement system's integrity that smoothly handled Friday's transactions. Investor sentiment lifted further in ..

18.5.2004

Corporates blame politicians for carnage

CORPORATE circles have blamed the politicians for the crash in the stock markets on Monday. The market may have over-reacted, but has not that always been its nature? Pardoning the bourses' weakness for exaggerated response, they largely .

21.5.2004

Market not enthused; Sensex sheds 74

STOCK prices were extremely range bound on Thursday, primarily due to the continuing uncertainty over the composition of the new Union Government and the common minimum programme. The Sensex today shed 74 points to close at 4932, shedding ...

22.5.2004

Sensex on a roller-coaster ride

MARKETS turned volatile again as the benchmark BSE Sensex closed the last trading day of the week on a positive note. The Sensex was up 29.46 points (0.6 per cent) on Friday. The 30-stock index opened at 4922.48 points, about 10 points lower ...


23.4.2004

Sensex, Nifty dance to the tune of global forces — Correlation with emerging markets
FOR those of you who lost money last week, it may be of some consolation to know that your experience was not unique. You could almost say that stock meltdowns, like inflation and corruption, are global in sweep. Fund flows from institutional ..



it does not stop here.....

Oh I don't beleive this . Not Again..........


Now Come To October 2005 ... more than a year later

14.10.2005


Sensex slides 165 pts; tech stocks worst hit

WEAK international equity markets and a depreciating rupee against the US dollar depressed sentiment as BSE Sensex fell sharply by over 165 points. Technology stocks were the worst affected in Thursday's trading and they led the fall. Good ..

15.10.2005

Bank stocks pull down market; Sensex sheds 175 points
BANK stocks led the overall decline on Indian bourses on Friday with the Sensex moving down by 175 points. Weak Asian markets and selling by FIIs dampened sentiment further. Bank stocks moved down following the announcement of a huge equity ..

16.10.2005

SEBI effect: Small-cap, penny stocks lose steam, fall 50 pc
PRICES of several small-cap and penny stocks, which were driven up during the July-September bull rally, have fallen sharply in the last few weeks. This follows the SEBI action against some promoters and companies for manipulating stock prices ...

20.10.2005

Sensex falls 151 on FII outflow fears — Bearish sentiment across global equity markets
STOCK prices continued their downward trend on Wednesday with the benchmark BSE Sensex closing below the 8,000-mark, amid fears that a sliding rupee and weak international markets could lead to higher FII outflows. The rupee touched a low of ...

21.10.2005

Markets retreat from day's high but later recover from low levels
THE stock market recovered smartly today during the last hour of the trading session led by gains in the frontline IT stocks and some metals stocks. According to analysts, the rising dollar against rupee provided an opportunity for greater ...


An Our Finance Minister says...

FII inflows here to stay: Chidambaram
`20 pc jump in FDI'
THE Finance Minister, Mr P. Chidambaram, today allayed fears of possible large-scale pullout of portfolio investments by foreign institutional investors (FIIs) and expressed confidence that the country would continue to get large inflows. "If ...

Same day a little later

Sensex bounces back with 134-pt gain
STOCK prices rose on Friday reversing a three-day decline as value buying and statement by the Finance Minister, Mr P. Chidambaram, that foreign investors would continue to invest in India, buoyed sentiment. The relaxation of foreign investment ..



Lets party... (I am naive to beleive that this is the end of it.)

go ahead..... read further....

Is it year 2006. Who disturbed my party.....

same players in shakespeare's play


And Now......MAY 2006..........

The sequence

12.5.2006

1.Market plunges on Left's ascent
Buddhadeb on top in Bengal; LDF to rule Kerala; DMK-combine wins in TN More

16.5.2006

Metals melt the markets
Sensex tanks 462; heavy selling by foreign funds as domino effect takes its toll More

17.5.2005

Markets bounce back in style
Sensex swings 575 points during the day; closes with a gain of 51 More


And Our Finance Minister Says..

Just a correction, says Chidambaram

Terming the steep fall in the local stock market indices over the past few sessions as a "correction", the Finance Minister, Mr P Chidambaram, on Tuesday said that this trend primarily reflected the effect of global factors such as declining .


While going has been good...

On the second anniversary of Black Monday, the stock market scripted a different story with the bellwether BSE-30 Sensex posting its biggest gain in almost eight months.

Our FII friends were busy elsewhere....

Foreign funds, however, continued to be net sellers, on concerns of "stretched valuations" in the Indian stocks markets. According to provisional figures with NSE, FIIs were net sellers to the tune of Rs 466.55 crore on Wednesday. With this, net sale by FIIs in the last three trading sessions has touched Rs 1,728.35 crore.

Here comes the Butcher's party...


Sensex crashes 826 pts
Govt circular on investment gains, global concerns trigger FII selling More

The carnage continues..

The hammering on Dalal Street continued on Friday, with exchanges and broking firms dumping stocks due to lack of margins. Market-unfriendly statements by Left leaders on reforms and taxing of foreign funds helped despatch the bellwether BSE-30 down 452.82 points, or 3.98 per cent, to below 11,000.

The culprits were... again

Foreign funds were net sellers to the tune of Rs 1,459.21 crore, their biggest single-day net sales in May 2006. From the market peak of May 11, the FIIs have made net sales worth Rs 5,226.41 crore; thus, for the first time since October their net investment has turned negative in a month. During the week the Sensex lost 1,346.50 points or 11 per cent.

and what they say.....

FIIs net sellers

For the first time in seven months, foreign funds turned net sellers in May when FII sales touched Rs 1,459 crore on Friday.

Till Thursday they were net buyers for the month at Rs 90 crore.

The last time FIIs were net sellers was in October 2005, when they made sales worth Rs 3,693.90 crore.

Despite the net sales of May, FIIs were net buyers during the first five months of 2006, at Rs 18,567.10 crore.

In terms of total holdings of foreign funds on Indian stock markets, the amount is Rs 1,94,009.30 crore or over $45 billion.

"This is just a correction. We still think India is an attractive market," said Mr Andrew Holland, Head of Strategic Risk Group, DSP Merrill Lynch.

According to him, foreign funds have been liquidating positions in emerging markets including India, but considering the FIIs' outstanding investments in India, the sales accounted for only a marginal share.


Who comes to rescue.........

1.Finance Minister says

No plan to re-introduce long-term capital gains tax
Chidambaram also rules out review of tax pact with Mauritius More

No Effect on market

1,111-point Sensex shocker

Trading suspended for one hour; margin pressure triggers freefall More

SO RBI comes in to say

RBI pitches in to iron out payment glitches
Settlement banks assured of liquidity support More


Finance Minister ressures

Between bear hammering and taxman's missives

Another issue making top news is LTCG or long-term capital gains. The Left wants tax to be reinstated on such gains, while the FM has responded by saying there are no plans to re-introduce tax on LTCG.

Same Actors again and the reassurance...
the Communist Party of India (Marxist), which is extending outside support to the Government, on Friday demanded re-introduction of long-term capital gains tax and review of the DTAA with Mauritius.


Does it sound Familiar.......
The Finance Minister said that FIIs play a significant role in Indian stock market, but was quick to add that mutual funds also play an equally important role. He also said that FIIs are aware of the legal position on taxation.

and exchanges clarify...

No settlement problem

On a day of several twists and turns, both the NSE and the BSE were forced to clarify that there was no settlement problem and that the pay-in and pay-out processes were on course.


Well That was the time line of events and action takes at various points by different actors in the drama. It reads frighteningly familiar.



I am attaching a basic chart showing closing numbers of nifty and Net value of FII's buy and sell operation. It can be deciphered that FII's were first to exit and sensex took the dive later. (old figures were not available) But Business line hase reported that during FIIs were net seller when sensex crashed. on all the three occasions.



Each time sensex has risen like a phoeinix from the ashes. What I have not given here is how it played out in subsequent months. i.e. global cues and FROG factors. Is it conspiracy? No sir It is not. It is the way market moves up and down.

Who lost ...? For those who overleveraged their liquidity. First weak hands in Longs are squeezed out and then weak hands in shorts will be squeezed out.

If Economic growth continues the same stories will be repeated. On a longer horizon this dip will not even be visible. When actual slide comes signs will be different.

I hope I have not overstepped myself and nobody is offended. All are news clips from Business line which I started reading on 17th May 2004. courageous fool or incorrigible optimist. Say what you like.

Yours

with regards to all

Pankaj

Link addresses for comments on above

http://www.traderji.com/45356-post25.html

http://www.traderji.com/45360-post26.html

http://www.traderji.com/45361-post27.html

http://www.traderji.com/45365-post28.html

Now FII data continue
http://www.traderji.com/45436-post30.html ( by srini)


http://www.traderji.com/45437-post31.html ( by ravi)

Note to Members and Traderji

I am sorry that I have cut and paste the thread postings from "Investors, think twice bfore selling..." tracing events of three crashes since May 2004.
Those who have not read previous postings can read it and others can just ignore and move on.

Todays recap.

Hi

Sensex and nifty went up and thumped down.

Here are the numbers
Index Prev Close Open High Low Last % Change
BANK NIFTY 4326.65 4327.80 4466.80 4248.00 4295.50 -0.72
CNX 100 3106.15 3137.20 3160.30 3009.45 3029.60 -2.46
CNX IT 3936.10 3979.65 3987.65 3822.30 3859.50 -1.95
CNX MIDCAP 4435.70 4479.05 4542.90 4372.80 4388.25 -1.07
CNX NIFTY JUNIOR 5843.90 5970.55 6020.30 5720.00 5753.90 -1.54
S&P CNX 500 2712.35 2736.55 2765.50 2648.10 2662.55 -1.84
S&P CNX DEFTY 2436.70 2429.65 2463.20 2341.25 2359.65 -3.16
S&P CNX NIFTY 3199.35 3203.50 3249.75 3091.60 3115.55 -2.62

Govertnment is trying its best to control the damages with same flair?? and aptitude it showed on earlier occasions. As per FM sentiments have improved and market is smooth. Does it mean things will look up..?


Just look at the FII numbers.....
What are they saying to you. plain and simple Don't mess with us.
Govt. agensies active in buying can not match their financial clout

The FII numbers 24.05.2005


FII trading activity on NSE and BSE in the Capital Market segment(In Rs. Crores)
Date----- Buy Value---- Sell Value---- Net Value
24-May-2006----- 1944.09---- 3541.62--- (-1597.53)

They are still net seller to the tune of Rs.1597 crores.
warning to all
How long it can be absorbed by the market and who will do it, given that the sentiments are negative. Margin pressure will continue and hapless investors and punters will be skinned by greedy brokers.

At this stage those who want to short and those who want to go long are fighting it out. This battle will continue but liquidity will return only when FIIs turn net buyers. That will inprove the sentiments.

As of now they are involved in exit and selected pickings. Rest of us are involved in exit only or covering losses.

Remember they are the first to enter and first to exit.

There will be some time lag before their net buying improves the sentiments.
Signs of global cues and FROGs are still not there.

So WAIT...............

Pankaj

thank you pankajbhai for this seperate thread. really useful information.
ravi

Hi

Newspapers toned down their headlines and downdrift of sensex was reported as "sensex sheds 250 points". It is milder than carnage/bloodbath /mayhem. etc. and certainly does not evoke negative feelings. Ups and down are part of the market.

Some positive news on Corporate performance is trickling in. Next Analyst will start telling it is oversold, valuations are correct(??), economy is looking up, early signs of monsoons are good. Govt. intends to do this or that.

These are part of build up excercise automatically followed in any economy.

These are the signs apparent to every one without knowledge of TA.

Given the fact of negative sentiments are still prevailing in the minds of retail investors and traders they are unlikely to go for big buying.
So who buys the stock. Presently our own MFs, PSU's who were sitting on huge cash post-NFOs.

But they can not continue like this as after june their performance will take a hit( sitting on cash for a quarter without showing any returns)

So liquidity pressure will be there. Who will bail out. Govt agencies, who may not be able to direct the market( in opinion of some). They will reduce the margin requirement and banks have been asked to be little more liberal for this purpose.( statements are already there to this effect). But this will be used by those who suffered a lot now.

Those steps will not be enough. FIIs are still invested in the market to the tune of Rs. 1,94,009.30 crore or over $45 billion. So when they turn net buyers things will look up. and all tecnical indicators will start functioning.

Always remember rule and theories may not function in the time of extremes and one has to devise a new set of theories to meet the emerging requirements or new ways to meet the challenge. A trending market is a different scenario then the trading market. It is not meant for weaklings.

So what is to be done. bravehearts do what you feel is right.

markets will continue to be volatile and I have a feeling that FIIs are now involved in rotaion of thier sectoral holdings, though not yet confirmed.

Rest of us should look for good omens and wait.

Pankaj

Hi!

Yes right, same old story has been repeated. I have been buying on the days when market was sliding and even bought on freeze day. I will still buy if market goes down more, but only the shares I like. With indian economy still showing future growth, this market will only go upwards, these corrections must be used for buying. I bought Shivvani Oil, IVRCL, India Bulls, India Cements. I started buying in small quantities like 10 shares of each company each day and made my biggest purchase when market opened after freeze, remembering Black Monday, i hope i will make a good windfall again like black Monday. One thing more in this correction I sold my only 10% portfolio earlier and invested that again and invested more in this market. I will stay away from metals as with US interest rates rising, more money will flow from assests to US banks, same thing for stocks and commodities.

Hi

Members will find many more such similarities pointed as out by gandharv.
Today was contract expiry day and rollover was smooth.It was facilitated by relaxing margin requirement. Market has closed higher.

An illusion. What our FII friends are doing

See for yourself.

FII trading activity on NSE and BSE in the Capital Market segment(In Rs. Crores)
Date---- Buy Value--- Sell Value--- Net Value
25-May-2006--- 1893.23--- 3676.34---- -1783.11

So when index has moved up these FIIs are engaged in encashing it.
They are net seller by Rs. -1783 crores.squeezing the last drops of oil from the seeds .

So Things are not going to look up. Is it different this time?
Is it a crash or a healthy correction?

Ask those who have lost money. No explanation can bring back that.
Only a lesson to be learnt. Those who can't afford it, don't play on overleveraged money. Be within your limits and at least you will not suffer the agony of arranging margin to pump down the drain.

Other signals are yet absent. So market will move in a volatile manner. Strong upward push is yet to come.

I say still wait.

As for long term investors many have advised buy for certain scripts.
If you have done research, know the company, its finacials, its future plans, current PE and the rest of it then Go fo it.The market may slide from the current levels, which it has managed to hold, but sound companies will go up in the long term There should be no speculation in long term holding else it will be even more damaging. I.e. no bottom fishing but do search the bottom for pearls as that is where they are found.


Pankaj