The Crash( 17.5.2006) and FII activities since then

[pkjha30]

Hi

Just a quick thought
What is the difference between two crashes in May 2004 and May 2005.

First of all crash of 2004 was unanticipated on account of electoral debacle of NDA Govt.
Fear that reforms will now be derailed.
Fear that with left in proxy driver seat, will get anti reformist policies implimented.
So lot of uncertainties and fear about future course of action that Govt of the day would be forced to take.

The crash was not about any uncertainties . It appear to be profit booking by the FIIs mainly, operations of hedge funds, global factors such as Fed Rate, cheap yen etc.

Nobody has called into question the reformist agenda of the Govt. Almost all are sure that it will continue.

Hence, I feel that by end of 2nd or third week, when hints of corporate results would be known to FIIs (first), the positive trend would emerge.

Just being optimist as I am.

Pankaj

 

[jdm]

Hi
First of all crash of 2004 was unanticipated on account of electoral debacle of NDA Govt.
Fear that reforms will now be derailed.
Fear that with left in proxy driver seat, will get anti reformist policies implimented.
So lot of uncertainties and fear about future course of action that Govt of the day would be forced to take.

hi pankaj,
had the nda govt. won the election in 2004, how the sensex would behaved? this question had always bugged me.

one of the most respected name in Elliott Wave analysis in India is Vivek Patil, who in his post in icicidirect.com did predict before the fall that 'the sensex will fall violently thus bringing an end to the first leg of the secular bull run which we are witnessing'. it was all in the technicals.

again its not only the Indian market which fell during that period. but the fall in sensex was an extension of the global meltdown, similar to that we are witnessing now.

my bet is even if the nda had won the election, the markets still would have taken a harsh beating. well maybe in the pretext of profit booking, as it is now.

whats your bet?

cheers,
jdm.

 

[pkjha30]

Hi jdm

I don't know what was the technical indicators then in 2004. But by and large it was attributed to NDA defeat. Subsequently , dip in sensex was on account of transaction tax. As Karthik said every time sensex stood up and started runnin again.

May be some other pretext would have brought the fall. Quite likely. But for NDA victory , market would have jumped like what was seen since Jan 2006.
Then fall would have bee severe prolonged and delayed for few months.FIIs were caught off guard and they pumped in money to prop themarket. remember the recovery was equally swift in 2004

One important aspect of 2004 fall was that almost all stocks were trading near their 52 weak low. That poition is not seen now. They are sixty % above their 52 weak low. In fact if it falls like 2004 I would have been in delirium as to the choice of stock.Perhaps I would have borrowed and invested value wise. Now it is tempered by reality.

My bet. I would go with karthik. I think we shall see sensex crossing their all time peak by next quarter at most by december 2006.
2008-09 will bring some uncertainty being election year.market might cross 18000-20000 and come back to 15000 as a result of fall. May be elliot wave predict the numbers in this range.

Pankaj

 

[pkjha30]

Hi

Finally Pessimism has become so deep that last in last outs calling themselves fall guy. But on a day nifty has declined Our FII friends are upto what??

See for yourself. This is for Cash segment. Delivery based.

FII trading activity on NSE and BSE in the Capital Market segment(In Rs. Crores)
Date--- Buy Value--- Sell Value--- Net Value
5-Jun-2006--- 2059.06--- 1532.53 ---- 526.53

So when fall guys are selling ,they (FII) are buying. Surprise. It falls into their pattern. If Indian story is overvalued overhyped why this buying. What are they buying? Markets are blood red and FIIs are buy guy??? FIIs are clearly indicating by their action that they believe India Story. But their words are elsewhere. Classic case of diversion.

Any way this thread is not about anything else. So I won't talk about it. This is a question of fact that I have presented. It is upto you how to interpret it.

Sebi Figures for BSE+NSE is this

Daily Trends in FII Investments on 05-JUN-2006

Reporting Date--- Debt/Equity--- Gross Purchases(Rs Crores)---- Gross Sales(Rs Crores)---- Net Investment (Rs Crores)----- Net Investment US($) million at month exchange rate
05-JUN-2006---- Equity -----2179.10----- 1538.60----- -----640.40----- ----142.50
Debt ----199.60---- 0.00 ----199.60 ---44.40


The above report is compiled on the basis of reports submitted to SEBI by custodians on 05-JUN-2006 and constitutes trades conducted by FIIs on and upto the previous trading day.


As for derivatives , Figures are as follows
Details---Buy---Sell---Open Interest at the end of the day ---No. of Contracts---Value(Rs in Cr)---

Index Futures--88819---2655.17---39800---1187.15---298881---9154.68---

Index Options---5302---159.01---2578---80.94---63533---1964.03---

Stock Futures---14615---530.27---3520---117.11---351258----11787.20--

Stock Options---0---0.00---416----20.43---1837---86.74---


I think rag_ash is right when he says distribution is going on.

FII are net buyer in cash segment. Index fututres are also net buy?? What is the significance?? I don't know. Perhaps somebody could throw some light.

Important world markets are mostly in red. Global cues ?? Anybody's guess will be as good as mine.


Pankaj

PS: If this does not serve any pupose may be it is time to stop it.

 

[Czar]

Another uncertainity is the govt being able to last full term....

 

[pkjha30]

Another uncertainity is the govt being able to last full term....

UPA or NDA or XYZ . Does it matter?? Now?>> They are all dancing to the tunes of reforms or is it FII??

 

[Czar]

FII - definately - I wish the amount that is invested in the stocks market would instead be invested n India & create jobs, growth, mordernization, etc then would i be happy instead of it being invested in meagre speculation...then would my dream india would arrive & pakistan would come begging to allow itself being merged with our india...dreams...1 day like e.germany & w.germany can happen... Jai Hind

 

[ragh_ash]

hi pankaj,
actually i use free data.not paid so can't be sure. but the trend i see is that almost all the scrips that are discussed(almost all) in this forum show distribution right from Jan 06 , except some like Tatasteel, Acc, Reliance which show "smart money" is taking position.
does it mean FIIs will again take us for a jolly ride again, ofcourse they will. so what do we do, follow money management and take positions. steer clear of Mid caps.and try and stick to large caps.easier said than done.
"Market main aye hai to hume trading karna hi padega....Jeevan ko chalana hi padega"
cheers

 

[pkjha30]

Hi rag_ash

From a trading perspective I wouldn't know. I suppose these are the market-cycle conditions and one has to live with it albit wiser.

Retail investors do not have the kind of access to the information which others have including technical indicators. They mostly rely on tips and advise of friends ignorants and brokers and loose their life saving.

So when they return to the market hypt has already been build up and is reaching cresendo. What I say is to ignore all the hype and go for good scrips and invest for long term. Your returns from the market will still be higher than most of the instuments .Sell off in panic causes real loss and buy into euphoria is dengerous to financial health.

But my advice will be for ordinary retail investors buy whenyou get clear indication that market is not going to tank further. Some wild swing will be there. So our wait is for the Indications. Tchnicals are not available. So I have to wait and see what our friends from abroad are going to do now.

I doubt their words and have to watch their actions.

As for trading, I f you followed Saint's advice it would have given cause for celebration rather than despair. I think that in gist he said confirm uptrend, buy on pull back, fix stoploss and adhere to that. Past your target price raise stoploss and get out on indication of weakness.So , If you are successful 6 out of 10 times you have a winning stretagy.

All the best. Follow thy trend. That is what czar is also doing on reverse side.

Pankaj

 

[pkjha30]

Hi

This is a quick post .All world markets incl. American markets , Asia Pacific and Latin America are deep in the red. Almost 1.8% on an average down.

High caution is advised. Wait and watch policy is to be continued.
I think sensex and nifty will be replicating at least by twice the amount i.e. more than 3% in red.


Pankaj