Outlook India: Market Divorced from Reality

vinvest · #1 3rd September 2010, 09:03 AM

Link here.

From the article.

Quote:

It shows how a few investors are contributing to a large percentage of the trading volumes in the country’s top exchanges. Is it surprising then that despite tepid corporate results for the first quarter, poor industrial data, inflation and rising interest rates, the markets are volatile, reaching 30-month highs and inching towards the 19,000 mark?

Quote:

Consider India Inc’s Q1 results. The top 100 companies listed on the bse posted a 22 per cent rise in revenues in the last quarter. However, operating profits only grew by one per cent.

Quote:

The skew is accentuated by the market’s dependence on FIIs—in the past quarter, domestic institutions have largely been net sellers with FIIs being net buyers.

Lots of other interesting data in the article.

Alchemist · #2 3rd September 2010, 11:04 AM

Indian markets have always been shallow and I expect them to remain shallow for at least another decade.

India's wealth is concentrated in the hands of a few people.

The same is getting reflected in equity markets, where a comparatively small number of people are responsible for most of the trading activity.

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Also, I don't see any reason why anyone should be surprised about FII domination in Indian markets.

FIIs dominate the market because foreigners have much more money to invest than Indians.

The combined GDP of EU and US is nearly 25 times that of India's GDP.

sandeepnair · #3 6th September 2010, 01:20 PM

The investors in these markets form consortiums among themselves such that, a group of these investors are able to make changes in the overall market indices. FIIs are one such group. When they think, the time has come to book profits; they take up a selling position. This causes the market to fall and when the market falls, these groups again buy the shares; thus making profits again out of their buying back the shares.

San Yad · #4 6th September 2010, 01:29 PM

Quote:

Originally Posted by sandeepnair

The investors in these markets form consortiums among themselves such that, a group of these investors are able to make changes in the overall market indices. FIIs are one such group. When they think, the time has come to book profits; they take up a selling position. This causes the market to fall and when the market falls, these groups again buy the shares; thus making profits again out of their buying back the shares.

You should follow closely with FII then and make money.

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Alchemist · #5 6th September 2010, 10:14 PM

Quote:

Originally Posted by sandeepnair

FIIs are one such group.

There are more than 1700 FIIs with more than 5400 sub-accounts registered with SEBI.

There is no way that such a large number of FIIs can work as a single consortium.