The Crash( 17.5.2006) and FII activities since then

[pkjha30]

Here is the complete record of FII buy-sell since 2006 Jan

FII trading activity on NSE and BSE on Capital Market segment - Archives

Data from 01-01-2006 to 30-05-2006


FII trading activity on NSE and BSE in the Capital Market segment(In Rs. Crores)
Date Buy Value Sell Value Net Value
04-Apr-2006 2061.40 1964.99 96.41
05-Apr-2006 1940.34 1830.60 109.74
07-Apr-2006 3021.48 3778.07 -756.59
10-Apr-2006 1800.54 2366.23 -565.69
12-Apr-2006 2481.35 3289.51 -808.16
13-Apr-2006 2124.48 3070.32 -945.84
17-Apr-2006 1847.60 1754.82 92.78
18-Apr-2006 2065.14 2505.91 -440.77
19-Apr-2006 2286.85 2586.70 -299.85
20-Apr-2006 2225.26 2204.88 20.38
21-Apr-2006 2669.81 2792.42 -122.61
24-Apr-2006 2037.87 2534.53 -496.66
25-Apr-2006 1426.24 1955.54 -529.30
26-Apr-2006 1715.01 1961.09 -246.08
27-Apr-2006 5604.06 2968.29 2635.77
28-Apr-2006 1889.25 1988.52 -99.27
29-Apr-2006 106.20 93.41 12.79
02-May-2006 2989.01 2717.32 271.69
03-May-2006 2654.44 2194.85 459.59
04-May-2006 2395.81 2220.36 175.45
05-May-2006 1419.74 1745.54 -325.80
08-May-2006 2410.32 2320.58 89.74
09-May-2006 2317.14 2201.90 115.24
10-May-2006 2225.77 2270.62 -44.85
11-May-2006 2063.72 3043.64 -979.92
12-May-2006 1321.23 1792.71 -471.48
15-May-2006 1631.66 2444.09 -812.43
16-May-2006 2384.78 2959.18 -574.40
17-May-2006 1477.64 1944.19 -466.55
18-May-2006 1969.05 2834.44 -865.39
19-May-2006 2316.93 3776.14 -1459.21
22-May-2006 2772.98 3645.47 -872.49
23-May-2006 2173.30 3305.33 -1132.03
24-May-2006 1944.09 3541.62 -1597.53
25-May-2006 1893.23 3676.34 -1783.11
26-May-2006 1522.39 1827.10 -304.71
29-May-2006 938.18 1054.82 -116.64
30-May-2006 1439.66 1652.52 -212.86


Here is the chart for FII Buy and sell

Pankaj

 

[rheinu]

Dear Pankaj,

Today markets all over US Euro Latin Amerika heavily down. Can we expect another 850 pts crash like on 18th May.That day also world market behaved like this. Also I guess yesterday FIIs have sold heavily in stock Futures.
rheinu

 

[srinivasud]

Hi Pankaj,

Go through the artical,
http://articles.moneycentral.msn.com/Investing/JubaksJournal/HowJapanSankTheUSmarket.aspx

Srini

 

[pkjha30]

Dear Pankaj,

Today markets all over US Euro Latin Amerika heavily down. Can we expect another 850 pts crash like on 18th May.That day also world market behaved like this. Also I guess yesterday FIIs have sold heavily in stock Futures.
rheinu

Hi rheinu and narendra

looke like FII F&O data also need to be tracked to get overall picture of their activities. Amit has made very incisive analysis in his post in nifty fifty.
I will certainly go through the thread if time permits and also post relevant information. Thanks for pointing out.

Pankaj

 

[srisara]

Looks like FII's are pulling out at every Top.

Satya

 

[pkjha30]

Looks like FII's are pulling out at every Top.

Satya

Hi
That's right. As long as they are pulling out it will happen. Yesterday all world market was in red. I noticed something intersting. World indices were down around 1.61-2.06%. in the night of India. And Indian market was down by 3 to 4% as of now. It seems depth of Indian market is around half of the western indices or may be less. Individual stocks have taken different hits.

The article pointed out by narendra is intersting. If you have time go through it. I will give my comments tonight.

I still think it is wait. LONG TERM trend, if broken, will trigger further collapse as fundamentals will also be questioned. Its a nice gift on the second anniversary of UPA assuming office. On assumption they had given similar gift. Same was the case for BJP led Govt.



Pankaj

Pankaj

 

[pkjha30]

Hi

Before anything else . Here is today's FII data

FII trading activity on NSE and BSE in the Capital Market segment(In Rs. Crores)

Date---- Buy Value ----Sell Value--- Net Value
31-May-2006 ---- 1556.6 ----2207.52 ----650.92

Today buy was little more than last two days figures

29-May-2006 938.18 1054.82 -116.64
30-May-2006 1439.66 1652.52 -212.86

But notice that sell has acclerated. Therefore sell to day is -Rs. 650 crs.


Now the question is as FII are allowed trading in F& O side are they shorting and if so should they be allowed to do that. Govt's policy on FII does not gel with the idea of their shorting in Indian Bourses. Somebody may throw some light on this.

The second point is if India is down in the dumps then why FII buy activity is seen.It is part of hedging against any surprise upside.

Third possiblity is of cource sectoral rotation.

Lastly given the total amount of money invested in FII segment, why all are not taking their money out. The current outflow looks very large but it does not constitute a respectable percentage of FII holding.

I suspect that they are still holding and if they were all to pull out , leave alone bulls ,even our bears will also be made mincemeet for sure. Indian market will get into global isolation on catastrophic outflow of money. That situation is not seen at all. Many of us would remember Brazil and Argentina.

Now that 10500 is gone , it is likely that market will move in a range of 9500-11500. A period of consolidation will be there.

FIIs are not pulling out then who is going out. Perhaps hedge funds. That is what Amit perhaps called smart money (and not FIIs, as I thought.).

Well FROGs are not yet croacking May be in anticipation of good rains they will do. Global signals are still negative to neutral. I would advise wait.

Those, who are long and short, they will have to come to terms some time. After all nobody can make money all the time without some loosing it. Weak only loose , such is the game. Those who rely on tips and get lucky are simply lucky.

Pankaj

 

[pkjha30]

Hi

Just a brief note. Though global market was in green , I suppose it is not yet significant. Probably, shorts will be taken to task before it is turn of Longs. Uncertain. FII inflow is still negative. So sentiments will be weak. Investors who want rollercoaster ride may like to enjoy it. But caution is the buzz word for investors. Let market find its true value or let it set up for another uptrend. Till such time it is going to meander perhaps. We ill again watch for FII/FROG factors and see if it correlates to uptrend also.

pankaj

 

[pkjha30]

Hi Pankaj,

Go through the artical,
http://articles.moneycentral.msn.com/Investing/JubaksJournal/HowJapanSankTheUSmarket.aspx

Srini

This article was written by Jim Jubak in his weekly journal JubaksJournal.

It is titled " How Japan sank the US Market."

His question is how to explain the global meltdown started in May2006.


He says Bank Of Japan is behind all this.

It's the Bank of Japan that's calling the tune for the world's equity markets.

He says that it is not correct. As higher interest rate would make bond markets attractive.

The market decline, .... is a result of worries that U.S. inflation is in danger of spinning out of control and that the Federal Reserve will have to raise interest rates at its June meeting and beyond.

the odds of a June 29 interest-rate hike, as indicated by prices in the Fed funds futures market, climbed to 50% from 35%.

That's not a huge shift

His point is that Bond market have rallied in the past when interest rates were hiked. Also Gold came off its high though it is a classic inflation hedge.
Dollar wasn't weak as would have been expected.


The reason for this strange behaviour is explained interms of BOJ sucking global liquidity out of the world financial system
He says

... the Bank of Japan has been taking huge amounts of liquidity out of the global capital markets. In an effort to re-inflate the Japanese economy and end the years of deflation that had kept the country mired in a no-growth swamp, the Bank of Japan had pumped billions into the country's banking system. Now that the economy is finally growing again and now that prices aren't sinking any longer, the Bank of Japan has given two cheers to the return of inflation and has started to remove some of that cash from the financial markets.

In the last two months, the bank has taken almost 16 trillion yen, or about $140 billion, in cash deposits out of the country's banks. The country's money supply has fallen by almost 10%. The Bank of Japan isn't finished pumping out the liquidity that it had pumped in. That should take a few more months. And when it is finished, the Bank of Japan is expected to start raising short-term interest rates.

His argument is that japan was providing cheap money to the speculators who overleveraged. Now that Yen is not all that cheap, it would be difficult to fund last stages of bull rally and speculators would take money out from the market as emerging markets would be riskier. Well he was explainig US market and opined about emerging market. For example he quotes facts about mumbai stock exchange

India's Mumbai stock market, up 21% in 2006 and 70% over the last 12 months, has seen an inflow of $10 billion in overseas money. That wouldn't be enough to move a market like the $14 trillion (market cap) New York Stock Exchange, but it's a bigger deal on the $742 billion Mumbai market. Although $10 billion isn't enough to move a market by itself -- that took improving fundamentals in the Indian economy -- it is enough to increase upside momentum once the ball is rolling.

The interesting point is while he was explainig Mumbai fall even before explaining US fall, he talked about fundamental improvements to explaing the rise. Whereas his point was that it was due to cheap yen. He says , thereafter that cheap money is required to fuel the momentum and it isn't available any more due to increased perception of risk factors.

He exhibits a bias towards emerging markets and unable to come to terms with the growth even while acknowledging it.

What essentially he is saying is that market was rising due to improved fundamentals and last leg of rally was fuelled by speculators with cheap yen and hence market slumped. We always know that hot money chases profit even if it is .001% and will move out if risk is greater. So far nothing knew he told us except for himself speculating tha BOJ is taking money out of system. Well it is anybody's guess that hot money is availaable in the system not only from BOJ but from black economy which by one estimates account for almost half of the world economy.


He again says that

What the Bank of Japan has done is to set off a global re-setting of investors' risk tolerance. With Japanese interest rates so low and Japanese cash so abundant, speculators, traders, and investors have been more and more willing in the last few years to take on risk at increasingly low premiums.

and wonders that

It isn't amazing that anyone would buy Indonesian bonds.

He warns that risk tolerance is getting reset and it will take awhile to finish this operation
Markets move from one equilibrium point to another by a messy process of over-shooting on each extreme of the swing until they find a new center.
[/quote]


So he predicts that 2006 will see volatality. Well he tried to explain US market ended up with India and Indonesia. Strange!!

I was struck by his acknowledgement of improved fundamentals yet his overlooking this and stressing that cheap yen was responsible and now that it is not available it will be volatile.

I am not at all convinced by his argument and I feel personally that growth was the prime mover and it will remain so. at the time of sensex breaching 10000 mark everybody was expectig 20% fall. So if it comes now what is new in that. Markets does behave in cyclic motion and this also seems part of that. If growth continues market will move even without hot money chasing 0.001% profit.If fundamentals are growing that is the reason good enough to remain invested unless individual also thinks like global speculators and behave like one as in mob mentality. pretending bears and also bulls may not be spared by them. So penny stocks and cheap tips should not be the flavour of the day. Find your stock and wait till you become convinced of its true worth. Then buy as investment.


Pankaj

 

[pkjha30]

Hi All

Here is the puzzle for somebody to crack it.

FII buying and selling bot have increased but they remain net seller by a small margin or Rs. 123 crs.

FII trading activity on NSE and BSE in the Capital Market segment(In Rs. Crores)
Date--- Buy Value ---Sell Value--- Net Value
1-Jun-2006 ---2087.27 ---2210.24--- -122.97

I think sell signifies shorting activity by FIIs operating in F&O segment.
But why do they buy. What does it signify? Where are they buying and why?



Probably Bear Rally is also on the last legs when every tom dick and harry wants to short it just like it was when they wanted to go Long.

Whole day I examined causes of 1929 Great Depression and found that all the ingradients are not present. But two of the most important ingradients are there.

Psychological -- i.e. fear
Leveraged money.

Fortunately run on our banks would not start as exposure of Banks to market is extremely regulated.

Global analysts or what I call them FROGS are not yet croacking.
FIIs are net sellers. So what.... just wait it out.


Pankaj