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Indian Stock Market: An Interesting Insight

Foreign Investors have been buying into Indian Markets, What about You!

Though Foreign Institutional Investors (FII) and Foreign Portfolio Investors (FPI) have bought for many months in a row in the past also. However, this time it looks different due the following: –

     1.  They have surpassed all previous limits of inflows.

     2.  Oct/ Nov 20 monthly inflows have been higher than any previous annual inflows.

     3.  FIIs/ FPIs sold at low in Feb-May 20, when market was moving from 12000-7600 , have bought                 at  high from 11000 to14000 Nifty levels.
    4.  On the contrary, Domestic Investors/ Institutions have been successful in doing exactly the                         opposite i.e. bought from 7600-12000 and have sold from Nifty movement from 11000-14000.

Source: Bloomberg, CLSA
Source: Bloomberg, CLSA

Have Domestic Investors been able to outsmart the Foreign Investors !

The story from here on is yet to unfold!

What next?

In all probability, the market will continue to rise with running corrections/ sector rotations!

Why?

 1. Liquidity continues to get pumped into markets(UK announced its fresh stimulus recently)
   2. Cost savings through Work From Home, reduced fixed costs, utilising crisis to shed the flab and                improved  efficiency.
   3. Lack of other investment opportunities and  F Ds/ Debt instruments further losing their sheen
   4. Investor realising the importance of Liquidity in Investments
   5. DIIs and MFs having sold for the last many months are waiting for opportunities and dips to buy
   6. Retail investors aren’t fully deployed as yet. Everyone kept waiting for a copy book W, L, U shape             however  market  took a ‘K’ shaped recovery as per experts.While for us at FINVISION market did a         tick ( _/  ) mark recovery (12300-7600-14200 Nifty levels)

   7. Probably the first time in recent history when almost every conceivable asset class is being bought 

Elliott Wave Theory
Elliott Wave Theory, Image credit , Investopedia
So What?

As the market generally doesn’t oblige the majority. Thus, it may keep moving up, unless some unforeseen and abnormal event derails this trend.
For all we know, we may just be in the 1st wave of Ralph Nelson Elliott’s ‘Elliott Wave Theory’ of market moves.

We may doubt the Growth our own Economy/ markets, but the whole World cannot be deluded !!?

Finvision CEO
Author

Author of this  article, Col Sandeep Mahalwar(Retd) is MSc, MBA (Finance) and an IIM Ahmedabad Alumni. He has vast experience of managing finances. While in service he handled budget and Finance planning matters at national level for critical Government departments. Imparted training and coaching to stakeholders on matters concerning Finance.

He is founder of a Delhi based fully digital fintech startup Finvision Financial Services. Serving Smart and Customized Investment, Insurance, Finance and tax solutions. Find him at www.finvision.in 

+91-7508055826/ 8279677698   Email: sandeep@finvision.in

Cover Photo credit : freepik – www.freepik.com 

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