The P/E of Sensex companies has increased to 20.10 from 18.65 last year. The market cap of Sensex companies stands increased by under 1pc to about Rs 22.50 lac crores.
LIC of India invested Rs 40 K crs in equities last year and would be investing close to same amount in current year. This is huge investment by any standards and is for long term. LIC is very conservative in picking stocks and nurses them for good period which gives stability to markets. The last years upheaval would not have been there, had there been a more institutions of such type.
I have even earlier mentioned it and say again that there should be dedicated fund (under RBI’s control)which should pick up exchange traded funds representing broader indices as per a predetermined criteria and sell as per a predetermined criteria. This criteria should not be published and should keep varying as per advice of a team of people and RBI Governor empowered to decide the target amount of investment and dis-investment on any given day whenever the criteria becomes excercisable.
This will be putting some breaks on the uncontrolled movements and the public will have more courage in putting their savings in to markets. Which will give the required boost to issue of risk capital which will enable fast industrialisation of the country. Most of all the FIIs too will have some comfort while entering Indian markets. As for the funding, after some time this fund will itself grow and would be able to take care of growing fund needs.
The Nifty closed in vicinity of 4300 and behaved exactly as I expected and conveyed to you in my previous posts. Tommorrow it will be under clutches of operators who would either keep it very tightly range bound to not let any body encash profits on puts and calls or would give a sudden jerk to bring it to the ideal point where they have maximum to gain by way of digesting premium earned on call/put writing.