News: Indian FII figure may set the tone
(BL 10/04/2006) Mumbai - Overseas and domestic fund flow trend till Thursday has been positive and the general concern over valuation did not really affect the liquidity in the market. Sudden panic on Friday, allegedly engineered by a band of manipulators, cast a deep shadow over the sentiment and integrity of market.
It may sound odd, but reality is that stock markets everywhere have been living with rumours; at times this primitive tool proved much stronger than the information technology-based efficient surveillance systems.
Efficient system?
It appears players, who have been shorting the Nifty futures recently, may have in a desperate bid to save their interest attempted to manipulate the sentiment of a bull market on Friday through this tool. Their strategy may also have been to pass it off as a "profit booking spree" or a "technical correction".
The assumption may have been that even an efficient market surveillance system or a pro-active regulator would find it difficult link rumour to trading deals.
The timing of the rumour generation was crucial. The time lag for obtaining FII trading figures on Friday is highest - three days. Also super-sensitivity of the market at its all time high level to the so-called unconfirmed reports regarding the market drivers seem to have been used to the hilt.
This week may prove to be a test for the market regulation as the manipulators threw a challenge to the systemic strength of the market.
The market outlook on Monday would to a great extend depend on the FII investment figure on last Friday. The action of the regulator in reassuring the broad investor community would go a long way to bring back normality in the market.
There is no reason to believe that the one of the most attractive equity market of the world would crumble because of some aberration. But the dent in the market psychology has to be repaired fast before it overwhelms all the positives that are still intact.
As a matter of fact, there was no let up in flow of money to Dalal Street. Some of the long-term overseas investors, with whom this writer talked to on the weekend, appeared unfazed by the volatility and fall in the benchmark index on Friday.
At the worst, their might be a tactical retreat or staying on sidelines. But the current level of maturity of the Indian stock market may not allow a crash, caused by a few manipulators.
It may sound odd, but reality is that stock markets everywhere have been living with rumours; at times this primitive tool proved much stronger than the information technology-based efficient surveillance systems.
Efficient system?
It appears players, who have been shorting the Nifty futures recently, may have in a desperate bid to save their interest attempted to manipulate the sentiment of a bull market on Friday through this tool. Their strategy may also have been to pass it off as a "profit booking spree" or a "technical correction".
The assumption may have been that even an efficient market surveillance system or a pro-active regulator would find it difficult link rumour to trading deals.
The timing of the rumour generation was crucial. The time lag for obtaining FII trading figures on Friday is highest - three days. Also super-sensitivity of the market at its all time high level to the so-called unconfirmed reports regarding the market drivers seem to have been used to the hilt.
This week may prove to be a test for the market regulation as the manipulators threw a challenge to the systemic strength of the market.
The market outlook on Monday would to a great extend depend on the FII investment figure on last Friday. The action of the regulator in reassuring the broad investor community would go a long way to bring back normality in the market.
There is no reason to believe that the one of the most attractive equity market of the world would crumble because of some aberration. But the dent in the market psychology has to be repaired fast before it overwhelms all the positives that are still intact.
As a matter of fact, there was no let up in flow of money to Dalal Street. Some of the long-term overseas investors, with whom this writer talked to on the weekend, appeared unfazed by the volatility and fall in the benchmark index on Friday.
At the worst, their might be a tactical retreat or staying on sidelines. But the current level of maturity of the Indian stock market may not allow a crash, caused by a few manipulators.
posted by InCar Group Press Room at 11:50
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