Home Add to Favorite Contact Submit  
             12 December, 2024
 

    
Category:  Articles » Finances » Stocks-Mutual-Funds

 

A Study on Capital Stock Market Movement in India - Present Scenario

Popularity:
         Views: 1793
2007-09-19 10:11:06     
Article by Dr. P. Chella Samy

Highest ever single day loss for sensex trading stopped at NSE & BSE as lower circuit is hit. Rs.7,00,000 cores of market capitalization wiped off in a single day at the bourses black Monday. The above are some headline taken at from leading business declines. The month of may 2006 has turned at to be cruel for investors and traders not surprising, considering the following single day declines.

• 826 points May 18,2006
• 483 points May 19,2006
• 1,111 points (May 22,2006) partial recovery later

All that scud above should not make the reader think very negative above Indian Economy. Indian economy has been performing exceedingly well in the last 3 years coming out of a very devasting drought in 2002 in many parts of India rains, consequently agriculture and other allied sectors have been on a reband since then. A record Rs.1,00,000 crores of rural savings wealth was waiting to be tapped by various savings and investment channels.

The foreign institutional investors or FII and took note of a resilient economy and made huge investments in Indian bourses. Their investments were to the tune of 8 billion Rs in 2005-2006, Rs.7 billion the year before and Rs.6 billion in 2003-04. Such huge indict allocations were inheard of till now since they knocked on Indian doors after our economy liberalized in 1991 under Mr.P.V.Narasimha Rao. Not to be left behind agricultural sector industrial economy surged a head posting 7% GDP growth. Certain sectors like capital goods, IT sector have recorded double digit growth rates. The commercial vehicle and two-wheeler companies have recorded over 30% growth.

As a very logical corollary, stocks boomed all through. From a low of 2950 for sensex, 950 for Nifty in the year 2006 to a high of 12670 for sensex in May 11,2006 (and 3650 for Nifty), it has been a very dizzying height.

The number of FIIs recorded an at the time high of 950 as per SEBI date. This comprised of not only well known as timers like morgan stantley, UBS, Deutsche bank, Warburg pincus etc but also first time investors from Japan, Korea and Arab nations. But among the investors were the much dreaded hedge funds. These funds more into every country where they see good valuations invest in them and cash out as soon as they make their profits.

These funds are supposed to have sold very heavily in May,2006. Some of them are supposed to have made a small debt in their capital too markets know very well that they do not take kindly to it.

To conceptualise shortly, Indian markets are going through a structural Bull phase since 2002. This is supposed to last a decade in the least FIIs have rated India rating, a single data enough to convince skeptics crude oil has also barrel to 74$ high in 2005 fall. i.e. markets have surged a head after digesting this major international irritant crude hurts growth, but India is a major growth engine. So, India was a darling baby of global investors.

Then, what sense to make of May, 2006 mayhem? Is Indian bull run over?

An emphatic no is the answer.

The FIIs and hedge funds have pull out money mainly becomes of higher interest rates in U.S. please note federal reserve has recently increased interest rates to 4.5% under their new governor. The above increases the reverse flow into U.S. from India of FII investments Indian stocks were no longer cheap; at least in the short run. It's broad market in FE multiples (Forward Earnings) were 22. In comparison to its neighbours, it was costly.

As a consequence, Indian bourses have briefly lost their qlitter. While it is too early to ascertain how much money is like to have been pulled out by FIIs, it is quit obvious it must be considerable. It is not likely to be a one way bull for all times. It is the stock markets as all. What goes up, has to come down. i.e. to reasonable levels. But what is that level is the million, dollar question bunting Indian minds. A broad market FE of 15 is very reasonable. To quote a sensex target is hazardous, but a level around 8500 is very much in tune with technical indicators.

FUND BUYING in the year 2006

Date FIIs Sensex
31-Jan 3677.8 9919.89
28-Feb 11265.5 10370.24
31-Mar 17654.1 11279.96
30-Apr 18476.2 12042.56
31-May 11122.1 10398.64
30-Jun 11601.8 10609.25
31-Jul 12746.7 10743.88
21-Aug 16524.1 11511.68
Source: SEBI bulletin

FIIs and mutual funds continue to maintain a positive outlook on the markets, even though the amount of redemption continues to be higher than the amount invested in the markets post-crash.

As per SEBI data, till May 11, 2006 FIIs had invested Rs.22,243.3 crore in the Indian markets. When the markets crashed, they redeemed to the tune of Rs.10,641.50 crore by the end of June.

The markets took a positive turn in July, with FIIs turning net buyers. The investment form July till August 18 has been Rs.4,403.7 crore. "The recovery has happened, albeit not fully. There is still an amount of around Rs.6,000 crore which has been lost during the crash," said an analyst.

P/E Ratio

2006 Nifty Sensex
1-Jan 17.16 18.37
31-Jan 17.9 18.6
28-Feb 18.27 18364
31-Mar 20.26 20.05
30-Apr 20.31 21.35
31-May 17.46 20.41
30-Jun 18.44 17.9
31-Jul 17.64 19.02
31-Aug 19.15 19.6
30-Sep 20.92 20.73
30-Oct - 21.48
Source: BSE/NSE bulletin

Even as the benchmark BSE Sensex breached the 13,000 points today, market players, in particular FIIs, cautioned beside unsteadiness. Going by SEBI data, net FII investment in equity in the period January-October 30, 2006 is $6.533 billion. It crossed the $7 billion mark if debt market numbers are added. Fresh inflow of funds from new global markets like Australia coupled with strong earnings growth reported by domestic companies lifted the Sensex above 13,000 to close at an yet another all-time high of 13,024.26.

Conclusion

Investors can pick up stocks at these levels for a growth story for long term i.e. for equities a 5 years holding period is reasonable to give a very above average return. Caution may be exercised to buy only good, well established market movers and never, to buy on margins or play intraday or dabble in derivatives market, which is high risk.

* Lecturer, Department of Commerce, Bharathiar University, Coimbatore - 46. ** Ph.D Research Scholar, Department of Commerce, Bharathiar University, Coimbatore

Reference

BSE/NSE Bulletin

Specialized in: Study - Capital Stock Market - India - Present Scenario
Print article      Bookmark this page
Related Articles 
Mutual Funds Investing Ideas (Popularity: ): Are you someone who is worried about where to invest your hard-earned money? Do you need ideas for investing? If you ask me, I would suggest Mutual Funds - for they give better returns than banks and are considerably less risky than stocks. For investing in mutual funds, consider the following points:1. The first point before investing is to clearly identify what you need. Is it big returns or safety? ...
How To Double Your Returns In China Mutual Funds By Using A Simple And Secret Strategy (Popularity: ): Investing in China mutual funds are not an easy thing to do. There are so many funds to choose from and you can easily get confused on investing funds that suits you. Having a simple system can make your decisions much easier and clearer. Use the following points to get you on the right path.Have a specific investment goal.Determine how much you are willing to risk on a fund. The ...
Why Would You Even Consider Mutual Funds? (Popularity: ): · In addition, corporate "road shows" stop off at various professional management offices to bring them up to date, but don't expect them to come knocking on your door. Finally, influential Wall Street professionals share their opinions first with large, commission-generating customers-like mutual fund managers.· Instant Diversification: To achieve even bare-bones diversification on your own at a reasonable cost, you would need several hundred thousand dollars to invest.· Low Costs: ...
Stocks In Exchange Markets (Popularity: ): One of the popular stocks is Forex. This is a foreign market exchange. Forex supplies investment options, which investors often use charts to increase their odds of winning within the industry. Charts give the investors specs, such as high/lows, bids/asks, pips, spreads and so on. This helps them to decide what pair of currencies to bid on.Forex markets often include Java charting, web charting, etc. These charts post updates each ...
Belt Hold Line (Popularity: ): The belt hold line is basically the white marubozu and black marubozu within the context of a trend. The bullish belt hold candle opens on the low of the day and closes near the high. This candle presents itself in a downtrend and is an early sign that there is a potential bullish reversal. Conversely the bearish belt candle opens at the high of the day and closes near the ...


Related Business 
Stock Market India (Popularity: ): Angel Broking: Open demat account for online investment and stock trading in stock market. Live stock price of stock/share in Indian stock market.
NSE and BSE tips – Sharetipsinfo (Popularity: ): Sharetipsinfo provides live Indian stock market recommendations on your mobile phone and on yahoo messenger. Sharetipsinfo is one of the leading tips provider in India. We have a specialized team of stock market analyst who study market daily, infact minute after minute. We don’t mind whether market is bullish or bearish as we know how to deal with both of these in best way.
Stock Trading Tips (Popularity: ): Stock-trade-tips.blogspot.com is the best platform for getting daily valuable tips about Indian stock market, share market India, NSE and BSE, Commodity Tips, MCX, NCDEX and all about the share and stock market in India. Our professionals have the complete knowledge about the market and maintain the flowchart of Indian shares and stocks.
Niveza Inc. (Popularity: ): A stock market investor exchange that provides stock market tips through a unique stock rating tool. Free sign up to get best Indian stock market tips from stock market analysts and stock market experts. Finally beat Nifty with our valuable stock market recommendations and stock tips.
iFuture Capital (Popularity: ): iFuture Capital is an advisory company with an objective of providing accurate trading and investment recommendations in the stock market. Our expertise in technical research analysis in Cash and Futures market are proven to be profitable and consistent. We provide intraday as well as positional delivery stock tips in NSE and BSE with over 90% Accuracy.
Share Market Tips (Popularity: ): Stock Market/Equity Market in India is really uncertain & explosive. If Today Indian Stock market is extremely high may this rise convert in the huge downfall. Due to this Unpredictability, investors getting heavy losses. Stock tips/Equity Tips can protect or contribute serving hand to investors & traders who fail to earn money in the stock market. Be update & earn handsome profit through Tmmresearch.com's stock tips, share market tips, mcx ...
Stock Market Tips (Popularity: ): Market Stock Tips (MST) provides daily trading and intraday tips for NSE and BSE stock markets. These tips are extremely well researched and hence, they have a very high chance of making money for you. Investments are made easy with daily SMS from expert analysts of Market Stock Tips. Our Tips would generally include stocks with strong movements hence more opportunities to make significant money with small capital.
India stock market investments (Popularity: ): SBICAP Securities Ltd (SSL) is the broking arm of the State Bank Group and a wholly owned subsidiary of SBI Capital Markets Ltd.
Share Market Tips - SonicTrades (Popularity: ): A stock market advisory firm that provides stock markets tips through a unique stock trading tool. Free Trial to get best Indian stock market tips like mcx tips, commodities tips, best equity tips, nifty tips, bse tips, mcx gold silver, crude tips from stock market analysts and stock market experts. Finally beat Nifty with our valuable stock markets recommendations and inventory guidelines.
MCX Tips, Commodity Tips, Stock Tips (Popularity: ): Commodity market is in highly volatile stage in the current scenario. You need a financial advisor who can guide you through out whole volatile trends in market. Let us join with theequicom a wealth maker. Theequicom is an advisory firm which provides most unique and accurate intraday tips in equity market and commodity market.