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 Manmohans 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 Riteshs 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 arent 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
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 Manmohans 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 Riteshs 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 arent 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