News: Sensex at 12,000 is a purely domestic conquest
(DNA 21/04/2006) Mumbai - Hitendra Pandey is kicking himself. A south Mumbai resident, Pandey (not his real name) sold all his stocks nine months ago in the belief that the boom was about to go kaput. “I had invested in the top 10 Nifty stocks two-and-a-half years ago, but cashed out when the Sensex was ruling at 7,000-8,000 levels,” he said.
On Thursday, when the BSE Sensex closed above 12,000 for the first time, Pandey would have been about 40% richer had he hung on. Not that he didn’t make money. He gained around 40% on his original investment, but “fear got the better of my greed”.
Vikas Kumar, a Mumbai-based lawyer with Khaitan & Co, has no such regrets. “I do a lot of speculative trading and have made returns of close to 35% in the last two months,” he said.
“I have a lot of leveraged positions in stock futures and could take a huge hit if the market tanks by 400-500 points. Though I’m scared of these levels, I am a firm believer in India’s capital market story.”
On Thursday, when the Sensex closed at 12,039.55 points, all investors would have faced a tinge of fear or greed.
The cautious Pandeys of the world may be happy with the smaller gains they made on an earlier leg of this bull run, but most retail investors are in the thick of action precisely at this precarious index perch, when all the mavens are talking of a decline.
“The risk is on the downside and I expect the index to go down by around 20 per cent (to sub-10,000 levels),” said Andrew Holland, head of DSP Merrill Lynch’s strategic risk group.
Between Sensex 11,000 and 12,000, it is domestic money that has fuelled the markets, with cash-flush mutual funds doing most of the buying. Most of the previous Sensex peaks were conquered with the help of foreign institutional funds.
But between March 27, 2006, when the index closed above 11,000 for the first time, and Thursday, the FIIs were net sellers to the tune of Rs829 crore. Domestic funds bought Rs2,343 crore. So peak 12K belongs to domestic retail investors.
On Thursday, when the BSE Sensex closed above 12,000 for the first time, Pandey would have been about 40% richer had he hung on. Not that he didn’t make money. He gained around 40% on his original investment, but “fear got the better of my greed”.
Vikas Kumar, a Mumbai-based lawyer with Khaitan & Co, has no such regrets. “I do a lot of speculative trading and have made returns of close to 35% in the last two months,” he said.
“I have a lot of leveraged positions in stock futures and could take a huge hit if the market tanks by 400-500 points. Though I’m scared of these levels, I am a firm believer in India’s capital market story.”
On Thursday, when the Sensex closed at 12,039.55 points, all investors would have faced a tinge of fear or greed.
The cautious Pandeys of the world may be happy with the smaller gains they made on an earlier leg of this bull run, but most retail investors are in the thick of action precisely at this precarious index perch, when all the mavens are talking of a decline.
“The risk is on the downside and I expect the index to go down by around 20 per cent (to sub-10,000 levels),” said Andrew Holland, head of DSP Merrill Lynch’s strategic risk group.
Between Sensex 11,000 and 12,000, it is domestic money that has fuelled the markets, with cash-flush mutual funds doing most of the buying. Most of the previous Sensex peaks were conquered with the help of foreign institutional funds.
But between March 27, 2006, when the index closed above 11,000 for the first time, and Thursday, the FIIs were net sellers to the tune of Rs829 crore. Domestic funds bought Rs2,343 crore. So peak 12K belongs to domestic retail investors.
posted by InCar Group Press Room at 13:15
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