FII selling pressure: Sensex plunges 700 pts
Posted by Kavit Sharma on 01 Apr 2008 at 01:24 am | Tagged as: Business News - India, Stock Markets
Foreign Institutional Investors were net sellers in equities on last day of the quarter, amid the Sensex plunging over 700 points. The Sensex ended the day at 15,644.44, a fall of 726.85 points or 4.44 per cent from the previous close.
FIIs made gross sale of equities worth Rs 3,824.84 crore and gross purchase of Rs 2,959.05 crore, resulting in a net sale of Rs 865.79 crore. According to the information available on the SEBI website, FIIs sold shares worth Rs 114.30 crore on Friday.
Domestic institutional investors, however, were net investors in shares worth Rs 566.03 crore, provisional data available on the Bombay Stock Exchange showed. Brokers also invested in shares worth Rs 310.21 crore for their clients or retail investors.
Though BSE might have gone down in these few months, but it’s creating fresh opportunities for new FIIs to invest in INDIAN Stock Markets. So this is the minimum level around which our markets are hovering. Expectations are high for the new financial year. It’ll again be a year of high investments & high gains & profits.
All in all a good time to invest for beginners & must say, it’s a well compiled article
hey ankit…glad you liked it
I think you should check this article for a detailed analysis of the markets in 2008:
http://bizcues.com/2008/03/30/stock-markets-in-2008-until-now-a-review/
And I agree with you, FIIs will come back to India sooner or later. They have no place left to invest (with almost 0% growth expected in US and Mr. Montek Ahluwalia envisaging 9% growth rate for India).
The only question is how soon will FIIs start pumping money? I believe as soon as they have it (after all the losses)!
And retailers must be wary, after all its the retailers who lose maximum in these situations. Again refer to the above article (for beginners).
Well saying that FIIs will come sooner or later in India is something that I am not very sure about..
This is coz US economy is in recession and no matter how short this recession is it’s going to last at least about 18 months, the financial institutions there have incurred heavy losses and even in present quarter losses have been huge.
So the so called FIIs would be busy covering their backs and thus sucking money back from their foreign investments back to domestic markets of USA.
And regarding Indian markets being the only place where they can invest is also not correct in my opinion as over the last 2 months we have been shown that we no longer enjoy insulation from the global economic crisis. Today Indian markets are as volatile as any in the world and market still has not found it’s bottom yet. So FIIs will refrain from taking long positions as of now.
But I would like to differ from Mr.”Cheating_In_Cricket_Makes_Bhau_Angry”.
The FIIs cant sit idle, they need to cover up losses by investing in attractive foreign markets (as US markets are under recession). So they need to come to India as its the most attractive market as of now.
I agree, the market is not decoupled as believed earlier, but we are not the ones suffering recession…we are the ones having a projected growth rate of 9%. So what other option do FIIs have? They cant keep their money in US banks ( which are offering very low interest rates). They would, as i feel, make profits in India and improve their balance sheets which could help in improving US markets and stock prices.
Well first of all I disagree with the author on his comment in reply to “Cheating_In_Cricket_Makes_Bhau_Angry”
Financial institutions don’t just create money out of thin air they collect from people, the investors. Now when US economy is in recession following factors come into play
1. Investors loose confidence, they pull out their money from their investments, so these FIIs will have to return their money, where does this money comes from ?? from the foreign marlets as most of the money in domestic markets (US) got washed off due to subprime crisis and ongoing recession. This was the reason behind Bear Strains going bankrupt, ppl withdrew huge amount of money and the company had to book losses.
2. Although US economy is in recession inflation rates in US are still high, this results in increased operating costs not only for financial institutions but also for other US firms. So this again will contribute to money being pulled out of foreign markets.
3. Growth estimates of Indian economy have been scaled down although the figure is still high but it’s not good for investor sentiment, specially with India suffering from a severe high inflation wave and elections round the corner do not exactly spell Goldmine for the investors.
So even though valuations might be good today but with all the negative sentiment in the markets and the above three factors the valuations will go to still lower levels and would become more favourable for the FIIs. This is time to wait and watch but personally i dont expect any major recovery before the 2nd qurater results for the financial year 2008 - 09 come out.