The Crash( 17.5.2006) and FII activities since then

[pkjha30]

Just curious,todays volume was lowest in 3 months.I dont know whether its of any significance.

Well Amit

The style lacks substance. Not much to read into it. Thay may be in holiday mood as jdm pointed out.

Pankaj

 

[pkjha30]

Hi

Today's FII data from NSE

FII trading activity on NSE and BSE in the Capital Market segment(In Rs. Crores)
Date--- Buy Value--- Sell Value--- Net Value
4-Jul-2006--- 1113.58--- 971.52--- 142.06

And From SEBI

Reporting Date---Gross Purchases(Rs Crores)--- Gross Sales(Rs Crores)--- Net Investment (Rs Crores)--- Net Investment US($) million at month exchange rate
04-JUL-2006---1403.40--- 1148.60--- 254.80--- 56.10

Derivatives trade by FII


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


INDEX FUTURES-----1352.86 ----985.04 ---7181.19

INDEX OPTIONS ----251.68 -----75.85 -----1152.55

STOCK FUTURES ----267.20 ----267.43 ----6913.48

STOCK OPTIONS-----8.92 -----1.26-----25.55

The advance decline ratio was in favour of more declines showing weakness.

Advances--- 351
Declines--- 564
Unchanged --- 21

Total trade was only Rs. 4838.31 crs.

FIIs were neither buying en-masse nor selling en-masse. Not gung-ho about Indian stocks at present.

The market will turn bullish or shoot up only when they buy visibly and in bulk.So far no evidence of such a thing happening.That simply means that they will allow the market to return to normal or may be wait for more downside to come, post BOJ hike of rate of interest.

Till such time market will be in meandering mode or what is called consolidation or listless movement. Incase FIIs further decide to dump the stocks they would first ramp up slightly before bulk selling. That would happen when market approaches 11000. That is the place where straight 2000 point dive could be undertaken with impunity. However it is to be seen if it remains in pure speculation realm or translates into reality. May be they might allow technical parameters to have some play so that confidence of treaders and investors return .

Today mark Mobius was quotes as saying that Indian stock market is still overvalued at 20PE multiple vis a vis 14 PE of other EMs. PB ratio is 4-6 as against 2-3 of EMs. Meaning ,thereby, that it is still not attractive and there would be some more downside to it.

Global cues


On global front Dow and Nasdaq wasup with 0.70% and 0.84% . Last two working days both have shown positive movements.

Asia Pacific was mixed but on either side it was a limited movement.China India and seoul in negative and others in Positive territory.

Same was the case with Europe. Partially red and partially green. But limited movement on either side.

Clearly world investors are uncertain and no direction if forthcoming. Some events looms large on the psyche. But all over the world people have realised the nuisance value of HOT money or hedge funds. Their influence on stability of stock market is ever growing. In the year 2005-06 they have handled 1.5 $ trillion and is growing at the rate of 20%. Unregulated as they are at present, They pose serious challenge to money management techniques of ordinary investors and traditions FUNDS. They are not impressed abut the growth or whatever but flee the market at the slightest hint of trouble which induces volatality. They also don't want to be regulated.

Hedge funds can not operate without affecting their performance.
This is a latest report on Hedge funds

Decline in Hedge Fund Returns Due to Market Turmoil

The recent market turmoil has negative impact on a number of hedge funds. Most of them have had their gains wiped out in the past few weeks. Although almost all the hedge funds worldwide suffered due to the market turmoil, Japan-focused hedge funds have been worst affected due to the fall in the Nikkei. Seven of the 10 worst-affected hedge funds belong to Japan. Emerging markets and European funds are also affected. The month of June witnessed heavy losses for many hedge funds, as managers were overly bullish and took on too much advantage. Some British hedge funds also registered net losses in the past couple of months.

As for Goldman sachs

Goldman Sachs: Now the world's biggest hedge fund!

Alpha magazine's annual list of the world's largest hedge funds has declared Goldman Sachs Asset Management as the biggest hedge fund. New York-based Goldman Sachs Asset Management has over $21 billion in assets.

So , like Nomura and other japanese funds ,they too have interest and pose infinite problems to individual investors money management. The need is to keep track on their activity as much as possible.

Well that's all.

Pankaj

 

[pkjha30]

Continued......

Hi

Well That's not all

Something about BOJ adding confusion to uncertainty. Sometime back I was telling that politicians might try to force BOJ to keep rates where it is now.
Today's reuters report says

TOKYO, July 4 (Reuters) - Japanese political leaders sought to counter a rising tide of expectations on Tuesday that the central bank will raise interest rates for the first time in six years next week, asking the Bank of Japan to keep rates at zero to support the country's economic recovery.

Finance Minister Sadakazu Tanigaki and Chief Cabinet Secretary Shinzo Abe said the BOJ should leave monetary policy unchanged at its policy board meeting on July 13-14, while a majority of market analysts are forecasting a quarter-point hike.


"At this juncture, the BOJ needs to continue its zero rate policy to support the economy from the monetary side and ensure the economy does not go back into deflation," Tanigaki told a news conference.

Abe, who serves as the government's top spokesman, repeated the request later in the day and said he believed that Prime Minister Junichiro Koizumi shared his view.

"I think it is desirable (for the BOJ) to maintain zero rates for a while," he told reporters.

Both Tanigaki and Abe acknowledged that the final decision on interest rates was up to the independent central bank, which has ignored government calls not to tighten credit in the past.

The two were fighting an array of recent signals -- including economic indicators, market opinion and even minority views inside the government -- that suggest the time is ripe for an interest rate hike.

Speaking to reporters late on Tuesday, Koizumi said the BOJ needed to watch deflationary conditions when it decides whether to end zero interest rates. "It's just for the BOJ to decide while closely monitoring deflation," the premier said.

...Representatives of Tanigaki's finance ministry and the Yosano-run Cabinet Office sit in on BOJ policy-setting meetings. They cannot vote on policy but they can ask the board to delay decisions.

....One factor clouding the outlook is a public outcry over Fukui's personal finances, though a majority of market experts in a separate Reuters poll last week said they believed the flap would not affect interest rate policy.

So the tale of two cities continues........

Pankaj

 

[pkjha30]

And little something on USA fed rates uncertainty

Stocks in U.S. Endangered by Forecasts of 6% Fed Target Rate

July 3 (Bloomberg) -- U.S. stocks are threatened by predictions the Federal Reserve will raise its benchmark overnight lending rate as high as 6 percent.

Barclays Capital Inc. forecast the Fed's target rate will reach 6 percent by the end of the year. JPMorgan Chase & Co. and Credit Suisse Group made similar calls for next year. Last week, policy makers lifted the rate to 5.25 percent, the 17th straight increase.

What I am trying to do is that concerns are in the background not fully gone away. We have to be cautious and alert. Oil is somewhere between $73 t0 75 a barrel.


EMs are perceived as the most riskiest of asset class now. FIIs have the power to tank this market any time with impunity. So ever watchfull is the motto.

Pankaj

 

[Czar]

Dada, My view is that when markets start looking for directions they usually land up finding the downward one, if not this reason then that... it usually means people are fatigued & finance is drying + risk reward ratio is started favouring risk...

If not japan then the looming iran deadline, no...then oil 80...no...then fed... no then the left acting tough, still no... then just the scare of them will bring them down... after 3 years world need to take a 6 month break... settle its issue...I still stand by my view that bull markets are the biggest reason for rising inflation, govt.s know this & usual act late & in tandem than never... If Japan resists...maybe USA will push it to do so...

 

[pkjha30]

Hi

Today's FII figure from NSE

FII trading activity on NSE and BSE in the Capital Market segment(In Rs. Crores)
Date-- Buy Value--- Sell Value-- Net Value
05-Jul-2006----- 1991.58-------- 1615.12--------- 376.46

SEBI figure

Reporting Date ---Gross Purchases(Rs Crores)--- Gross Sales(Rs Crores)--- Net Investment (Rs Crores)--- Net Investment US($) million at month exchange rate
05-JUL-2006------ 1122.70--- 908.00---- 214.70---- 47.30
Total for July ---4319.50 ---3743.70---- 575.80
FII derivative trades from SEBI report


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



INDEX FUTURES ---424.09 ----437.48 ------7088.15

INDEX OPTIONS----164.31----55.61 -----1639.19

STOCK FUTURES----337.16----138.86---7142.40

STOCK OPTIONS---- --5.15-- --0.20-- --41.33


Mutual Funds are net seller for July so far
---------------------Buy--------sell---------net
July 2006 (upto 3rd)---138.56 --199.16 ---(-60.60)

For these three days they are minor participant in the market.

Market ADR

Advances-- 535
Declines--- 357
Unchanged-- 35

So market bredth was positive


TRADE STATISTICS FOR 05-Jul-2006
No. of trades 2,376,978
Traded Qty. (lakh shares) 2,117.13
Traded Value (Rs. crores) 6,059.92


So volume was not great but it was not meagre either.

S&P CNX NIFTY--- Present close----3197.10
------ Previous close---3138.65
------percent change-----1.86%

Nifty closed in positive territory and showed some strength.

But , in this uptren , neither FII nor MF were participants. So who are the participants buying Nifty in CM segment.

1. Bloodied retail investors who wants to cover his losses
2. Promoters who wants to raise stakes in companies controlled by them
3.Traders and arbitrageurs who can't stay away from the market for long

This is my guess. I have seen in the details of category wise turn over there is one section "Others" which has major trade done .this is left unexplained by SEBI or NSE.

On Global front, Asia Pacific was a mixed result. China and India closing higher but others were either subdued or in red.

Europe was red . No oasis of green to be seen.

Presently Nasdaq and Dow has started in red and going lower.

Analysts are active in global media stating that Fed rate at 6% will result in drop of 29%. History supports such views according to them.This will result in slow down and in poor performance so bad for the stock.

If that is so then the present confidence of market participants other than FII and MF appears to be hollow. The Sensex and nifty is largely dependent on FIIs. There could be no two opinion about this. The market growth is driven by liquidity more than the growth. If that is the correct assesment then market will take another bout of dive to test the lows formed recently.Unfortunately, our FII friends are not leaving India so soon. They remain invested as India with China would provide better returns then any other asset class. The meet in monaco of world investors(read FIIs and hedge funds) would discuss and debate this issue.

Till this issue is sorted out let us not get into any hope that sensex will resume its flight. It will meander and meander till another month and then in August, when Fed provides hint of enough is enough , if at all and pauses.A doubtfull proposition.

FII assesment of EMs particularly India , will decide the fate of Indian Market whether we like it or not.

Pankaj

 

[Czar]

Todays rally was totally operator driven to squeeze the shorters expecting a fall today seeing worldwide market & last hour was panic short covering dada

 

[Agilent]

Just curious,todays volume was lowest in 3 months.I dont know whether its of any significance.

Thats probably because shorts who were neck deep in water (trouble) must have covered progressively last few days, while prospective Longs (wanting to buy) who are waist deep in water in Mumbai may have found their mobiles drenched and no way to call their brokers.

But seriously... during rallies in 'bearish' times, volumes tend to dry up. So maybe its not the right time to go long

AGILENT

 

[amitt29]

I agree with Agilent volume and price movement move in either direction.
Also peculiar thing to notice is we have had bigger rallies in this downtrend than when we were making historic highs.My personal feeling is that we have reached an intermediate top or will be reaching.

 

[ravi1967]

hai all, reproduced below is an extract from Incademy.com about bear market

How to spot the appearance of a bear market
No bell rings to announce the start of a bear market and bull markets often begin in similar muted fashion.

But the final phase of a bull market, which precedes the start of a bear market, is usually accompanied by a number of signals:


An indiscriminate and exponential rise in prices

The widespread belief that 'it's different this time'

Widespread fear of 'missing out' on the next hot stock

The abandonment of traditional methods of valuing shares

High levels of trading volume and increased involvement of private investors

Relatively high or increasing interest rates

Major phases of a bear market

Historically, major bear markets have also followed distinct patterns.

First phase
There is a sharp initial fall that removes much of the 'froth' from the market.

Middle phase
There is a strong rally in prices for several months, which may lull some investors into thinking that the bear market is over. The rallies can be dramatic, but have lower trading volume than the initial sell-offs. And the advances tend to be concentrated on a few selected stocks, not the whole market.
Third phase
There is a long slow downward grind in prices, accompanied by low volume and periodic false dawns until the bear phase ends quietly as share valuations reach rock bottom. At this point, few investors from the earlier buoyant phase in the market are interested in anything other than the most conservative investments.
Once started, bear markets rarely finish without at least a 40% decline in prices from the previous bull market peak. Often it is substantially more than this, sometimes as much as 80% or 90%. The bottom of the early 1970's bear was 50% below the peak. The 1929-33 bear market saw the Dow Jones index fall to around an eighth of its 1929 peak.

The average length of bear markets is frequently said to be around 16 months, but this average includes short 'corrections' such as the 1987 'crash'. Major bear markets typically occur after a decade of rising share prices, and last for about four years.