Last week you could have noticed market fell over 580 points in a day because it was expecting a stimulus and rightly so, it has been denied. On Friday, there were rumours about Govt rolling back the super-rich tax and not surprisingly there was a bounce back. After the FM announced the SOPS including the tax invocation after market hours the market might bounce back today.
When you look at market behaviour from outside it makes you wonder whether fundamentals rule the market or only sentiments. Yesterday all the talk about growth faltering, unemployment, gloom and doom was all that we could see and read and today, suddenly, everything just vanished in a whisk as news of the FIIs tax getting exemption started making the rounds.
Thus the way the market functions today is - give me something, give me all the attention, spoil me, pander to my needs or else i will crash!!
In Aug FII sold to the extent of 10,656 crores and DII were net buyers of 14,599 crores. In July FII were net sellers to the extent of 16,870 crores and DII were net buyers of 20,394 crores.
When DII are net buyers, they are buying more than what the FII are selling, yet the markets fall. Does not this mean the DII, despite the growing money power have no sway over the market? They help mitigate the selling impact of the FII to some extent but despite buying more than the FII, they enjoy no or little clout. DII certainly do not have the kind of influence which the FIIs have; Do you think that consistent DIIs selling will force the govt to rollback any tax imposed on mutual funds? Or for that matter, with DIIs being net buyers, will they get benefits or can the govt take a stand and say what the FIIs think does not matter ?
Well, as we know the answer is a big NO to all the questions. FIIs continue to hold the market and the govt enthralled and what they need and want matters more than anything else.
Will DIIs ever be able to replace this clout of the FIIs? Thats a day we all should eagerly wait and it will take a long while. Though DII's are pumping huge money into the domestic equities, still they cannot absorb the foreign inflows. When more and more household savings go into equities instead of physical assets the influence of DII will go up.
Its a generational change we are talking about but it will happen. Till then we have no option and FII will drive the markets.
When you look at market behaviour from outside it makes you wonder whether fundamentals rule the market or only sentiments. Yesterday all the talk about growth faltering, unemployment, gloom and doom was all that we could see and read and today, suddenly, everything just vanished in a whisk as news of the FIIs tax getting exemption started making the rounds.
Thus the way the market functions today is - give me something, give me all the attention, spoil me, pander to my needs or else i will crash!!
In Aug FII sold to the extent of 10,656 crores and DII were net buyers of 14,599 crores. In July FII were net sellers to the extent of 16,870 crores and DII were net buyers of 20,394 crores.
When DII are net buyers, they are buying more than what the FII are selling, yet the markets fall. Does not this mean the DII, despite the growing money power have no sway over the market? They help mitigate the selling impact of the FII to some extent but despite buying more than the FII, they enjoy no or little clout. DII certainly do not have the kind of influence which the FIIs have; Do you think that consistent DIIs selling will force the govt to rollback any tax imposed on mutual funds? Or for that matter, with DIIs being net buyers, will they get benefits or can the govt take a stand and say what the FIIs think does not matter ?
Well, as we know the answer is a big NO to all the questions. FIIs continue to hold the market and the govt enthralled and what they need and want matters more than anything else.
Will DIIs ever be able to replace this clout of the FIIs? Thats a day we all should eagerly wait and it will take a long while. Though DII's are pumping huge money into the domestic equities, still they cannot absorb the foreign inflows. When more and more household savings go into equities instead of physical assets the influence of DII will go up.
Its a generational change we are talking about but it will happen. Till then we have no option and FII will drive the markets.
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