Friends,
The leading indices have been going up at break neck speed and nifty
has crossed the 5500 mark. In the mean time there is no news to
justify the same. There is game plan underway by some influential FIIs
or the like . It was a puzzle as to what may it be. Today I
have some idea what may be in store. Mr Ramesh Abraham reported in
today in Business Standard that about 1100 FIIs ( I would call them
foreign interests , may be with or without local patronage) have so
far invested $60 b in markets which may now be valued at $220 to 250
b. Over an average period of investment of less than four -five years
the returns are fabulous. Only problem is that as there is some thing
in air that says that the going for the industry in general may not be
good in India . The local industry is suffering badly for the dollar
has appreciated and there are other signs which may be called
stressful ie the rising wages, costlier raw material, interest at high
point than it was a few years back , nearly the best ever operating
margins in some of the industries like steel and cement, fresh
capacities about to be operational and host of other things like the
political turbulance etc. The fresh supply of paper is round the
corner.Clearly those in profit would like to book it. But there is a
catch. It has been tested by the bigger fishes that whenever any
attempt is made to sell the slide in market is steep. It is also the
case that the supply from weaker hands is no more coming in the market
and hence even a small dose of money injected is able to raise the
total value of the frontline stocks much more. The loss of time will
see the cat out of the bag ie the strained profitability would be a
well known fact and harping on the long term India story would not be
attracting many listeners. The attempt therefore is to take to the
possible height with whatevr resource is available and then the one way
selling will be resorted to , even beyond the most comprehensible
bottom point in a very short run with the stategic position building
in the F&O section. Even if the sales are pressed upto 3400 level the
average for the sales in nifty point terms may be ensured around 4300
level. Not a bad bargain in the end if the excution of the plan goes
unhindered. Since all money can not be withdrawn from the market all
at once , three good sectors have been left untouched or manipulted
downwards , namely, FMCG, Pharma and IT. These sectors are not prone
to recession and are in fact on sound footings. While the sales are
pressed for the rest of the items , scrips in these three sector will
be picked up so that some money may be deployed back just to keep the
public liquid to some extent . This exchange would also be beneficial.
Now , let us wait for the unfoldment of the final act of the drama. My
advice to you all is that don’t ever try to catch the falling knife and
stick to your investments in IT , FMCG and the Pharma and get out of
the rest. These are my own deep thoughts and are without prejudice
towards any one. Even if the game is played out like this , I would
not call it blatantly unfair. Everyone has right to defend his own
interests but without breaking of law. I don’t think any law is going
to be broken here given the benefit of doubt. Of course it is
govt.’s duty to have seen up till now whether the money in the game is
legitimate and public is not going to suffer at the hands of holders
of tinted money. I am not attempting to spread any scare , its only
that I am trying to put things in a logical sequence.
HariOm,
krsnaKhandelwal
