The Crash( 17.5.2006) and FII activities since then

[pkjha30]

Hi

Feeling nostalgic. Two years ago nifty and sensex took tumble and all stocks were quoting near 52 wk price.

Now that nifty / sensex has again taken tumble I thought to look at old posts on those crashes

Here is on thread started by neal
http://www.traderji.com/149-post1.html ( had a total of two postings)

Another one By traderji on performance of sectoral indices post May 17th 2004 crash
http://www.traderji.com/equities/627-performance-bse-sectoral-indices-since-may-17th-crash.html

Another one

http://www.traderji.com/equities/3995-market-crash.html on 22nd Sep 2005.

Same age old story with same questions and similar answers.

Pankaj

 

[jdm]

replay for those who missed the action 2 years back. not only the sentiments, but the global factor as well.

Same age old story with same questions and similar answers.

yet we despair. same as one did 2 years back.

 

[ucalegon]

Monday will be positive and Tuesday negative, I think. The data is that FIIs are slowly pulling back from the massive selling - just 20 cr. net sale on Thursday and perhaps a small net buy, < 100 cr. today. But I think will not pump in large amounts of money just yet, and most of today's rally has come from Mutual funds, LIC and retail.

The retail panic reaction is yet to come; and it will, next week in my opinion. Be very careful; the euphoria of two continuous positive days (today and Monday) will be enough to provide for cover and booking losses. FIIs are bottom-feeding at the moment and they're sitting on more cash than ever. MFs are doing the same thing, though they have much lesser cash.

I was wrong. Monday is negative, and I can't see any indicators for this week. There seems to be significant downward pressure, this may be the panic selling earlier mentioned.

 

[pkjha30]

Hi

let us see the world scenario as reported through Bloomberg.

Investors usually demand higher yields on longer-term debt to compensate for the risk that accelerating inflation will erode the purchasing power of their interest payments and principal. On average over the past two decades, 10-year yields have exceeded two-year securities by 0.92 percentage point.

The so-called inverted yield curve is a sign investors expect inflation to slow. Such ``inversions'' of short- and long- term Treasury yields have preceded the last four U.S. recessions.

Economic reports in the second quarter have shown that growth may be slowing. Job creation eased the past three months, the pace of home sales has declined over the past year and manufacturing growth has decelerated.

China posted a record $13 billion trade surplus in May and inflation accelerated, increasing pressure on the government to allow the yuan to strengthen.

China's current account surplus more than doubled to $161 billion last year, accounting for 7 percent of its gross domestic product. Over the same period, the U.S. had a record $805 billion deficit, including a $201 billion trade deficit with China. The U.S. trade gap widened to $63.4 billion in April and the deficit with China grew 13.4 percent to $64.4 billion, the Commerce Department said on June 9.

The U.S. current-account deficit is so big it risks causing a global recession, Bank of Canada Governor David Dodge said in March. A collapse in the ability of the U.S. to finance the shortfall could drive interest rates higher and choke growth in the world's largest economy, economists have said.

U.S. stock-index futures gained on speculation that last week's slide, the steepest in more than a year, was excessive given the outlook for earnings growth.

The risk for Bernanke, European Central Bank President Jean-Claude Trichet and their counterparts from South Korea to South Africa is that they raise interest rates too far and quash economic growth. The last time central bankers moved together to tighten credit was in 2000, the year before recessions in the U.S. and Japan cut global growth to the slowest in eight years.

Bernanke and his fellow central bankers are betting that they can succeed in capping inflationary pressures without unduly hurting their economies in the process. In declaring his determination to keep inflation under control at the bankers' conference on June 5, Bernanke said the aim was to ``foster sustainable economic growth.''

Well then these are the basic concerns and there is nowishing away these facts on a global scale.FIIs and other market players in different countries are moving their money towards treasury bonds in an effort to protect the yield. We have to remember that the scale of operation for them is in billions of dollars and suchs monies can not be moved without moving the market.

If a global recession were to take place as apprehended we would be truely in bear market for at leat one to two years on a world scale courtsey US of A
Indian Market has to contend how much of this recession could be warded off. Our balance of Payment is in negative just like US of A. How far we would grow in absence of global growth and in perticular US of A and how much our growth is tied up or integrated with world economic growth.

I think we will grow on our own as internal market itself is huge. There may be other factors also. But we will see little later. Also if these concerns are exaggerated

Your comments will be appreciated.

Pankaj

 

[pkjha30]

Hi

Let us come to the beaten path again

FII s are net buyer on12.6.2006 as reported by NSE:-

FII trading activity on NSE and BSE in the Capital Market segment(In Rs. Crores)
Date--- Buy Value--- Sell Value ----Net Value
12-Jun-2006--- 1516.65---- 1432.13---- 84.52

And SEBI says


Daily Trends in FII Investments on 12-JUN-2006

Reporting Date --- Gross Purchases(Rs Crores) ---Gross Sales(Rs Crores)--- Net Investment (Rs Crores) ---- Net Investment US($) million at month exchange rate
12-JUN-2006 2106.30 1597.50 508.90 112.10

So FIIs are net buyer by 508 cr rupees. as per SEBI figure.



Daily Trends in FII Derivative Trades – June 12, 2006



BUY--SELL---OPEN INTEREST AT THE END OF THE DAY

Amt in Crores---Amt in Crores----Amt in Crores
INDEX FUTURES

1351.18--- --1408.95-----9595.76

INDEX OPTIONS

198.20---141.74---2189.74

STOCK FUTURES
493.93---259.59--- 9415.09

STOCK OPTIONS

14.64 ---0.00---106.12

Index futures , they are net seller but in mrest they are net buyers.

I think MFs would be net seller to the same extent as FIIs are buyers.

As noten in previous post global cues are extremely negative. Analysts are looking at the inflation data of US . employment rate, oil ptices and US deficit coupled with fed rate increases and predicts that money will move towards lesser risk instruments meaning Bonds . Liquidity will be out and emerging markets which was mainly liquidity driven will plummet even lower.

What will be next consequence. Any move up will be painful and slow. Every time indices move up selling will be there from those who are stuck at higher level thinking that market will move up.Such supply levels will exist at least at Four to five major levels starting from the period Nifty was last seen in the similar range ie. october or may be earlier.Such underground stream of supply of stocks will keep indices down for a fairly long time say three to six months. If global recession sets in then naturally market will be subdued on account of less liquidity.

Well thats it. Nifty/sensex will touch what nomura says it will. Then only FIIs will see valuations. PE at 9-10 should be enticing enough for them. Till such time we have to enjoy Stephan king's Nightmare on Dalal Street.

For investors, Time will be there when we will get value for money , till such time money should be intact.Keep monitoring you individual picks, their fundamentals etc.

Wait and watch the struggle from the sidelines.

Europe was splashed in red. USA may be no different. China was in green. Nikkei was also in green.

To end on an optimistic note, this month will be crucial. Investors have to leave behind worries of FED rate and Oil prices as stock market will only offer higher returns than any other instruments. So our wait for global cues continue Look out for FROGs for Company specific details. As many of them will start hitting near 52 WK low.

Pankaj

 

[Czar]

no worries just exit till mid july to avoid complications... let the cats & dogs fight it out...

dada please give the link of nse where the fii figures are shown, cant seem to find it...thanks.

 

[pkjha30]

no worries just exit till mid july to avoid complications... let the cats & dogs fight it out...

dada please give the link of nse where the fii figures are shown, cant seem to find it...thanks.

Here's the link czar
For CM segment
http://www.nseindia.com/content/equities/eq_fii_nsebse.htm

For all statistics on CM segment
http://www.nseindia.com/content/equities/eq_markettoday.htm

For Derivatives
http://www.nseindia.com/content/fo/fii_stats.xls

for all statistics on FO segment
http://www.nseindia.com/content/fo/fo_markettoday.htm

Pankaj

 

[Czar]

thanks dada

 

[pkjha30]

Hi

A very Bad Morning. Nasdaq is down 1.98% and Dow is down .91%. Europe ,Latin America and rest of the world under red banner. At left will be happy,if not the ordinary investors.China was the only one in green though it is one of the few following left of the centre policy.

Indian markets are likely to face tremendous pressure and perhaps down by more than 5% finally by the end of the day.

To say further is to add insult to injury.

I suppose we can safely say that money not lost is the money earned.The castles we have built on High PE stand demolished. So we should see the valuations in terms of PE around 7-10 for the time being. Too pessimistic. No it is at the level of 8650 that we can hope some respite. But we should be happy if we get at that valuation as upside will be high. FIIs are net buyer for the whole week and monday too.

So Wait and Watch. No fresh commitment.

Pankaj

 

[Agilent]

Hi

A very Bad Morning. Nasdaq is down 1.98% and Dow is down .91%. Europe ,Latin America and rest of the world under red banner. At left will be happy,if not the ordinary investors.China was the only one in green though it is one of the few following left of the centre policy.

Indian markets are likely to face tremendous pressure and perhaps down by more than 5% finally by the end of the day.

To say further is to add insult to injury.

I suppose we can safely say that money not lost is the money earned.The castles we have built on High PE stand demolished. So we should see the valuations in terms of PE around 7-10 for the time being. Too pessimistic. No it is at the level of 8650 that we can hope some respite. But we should be happy if we get at that valuation as upside will be high. FIIs are net buyer for the whole week and monday too.

So Wait and Watch. No fresh commitment.

Pankaj

Have a heart Pankaj ... PE levels of 7-10 should correspond with Sensex around 4000-5000 (quick guess).

Surely u cannot be that pessimistic !

Meanwhile for those who are statistically inclined, here's a comparison of BSE Sensex with Dow, last 6 mths (attached). Inference : As a nation we are more volatile ... emotional ?? .. than the Yankees.

No, seriously, its our trading regulations which need to be tightened to curb volatility.

Is SEBI listening ? (Ironically , while they have the best intentions in this regard, they said last week they will allow Institutional short selling, to boost liquidity. All fine, except that their timing is wonky ... they shd have brought in this change 6 mths back, when we were facing irrational exuberance, rather than now, when the last thing we want is monumental fresh shorts !!)


AGILENT