General Trading Chat

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deba72

Well-Known Member
A simplistic interpretation of the headline FII data can be misleading ... because..

1. We don't know which FIIs are buying and who are selling .. all FIIs don't have similar performance record..

2. What are they buying... even if some FII sell ITC worth 100 crore ( for example ) and some other buys Liquidbees of 110 crore , it will show as 10 Crore net buy in the table..

Many FIIs buy into little known small or midcap stocks with very little correlation to overall index movements..

3. For what time frame they are buying...( or selling )..A short term hedge fund ( hot money ) will have a different perspective than a long term pension fund.. For example if some FIIs are buying in HDFC from a long term perspective, we cant use that information for a BTST trade..

4. Most importantly there is no way to know their mitigating positions in derivatives..specially the options side... This has become even more opaque as majority of the FIIs now take futures and options position in SGX....

So , as ST said, we can look at this data ( not the provisional EOD data; but the revised data which is published next day ) as one of the many indicators... and purely trading based on this data may not be prudent....

However in market any system is good which makes money ! :):)
 

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