Indian Stock Market
It is an interesting to watch the stock market data, especially those telling us about the way the whole sale buyers have behaved.
I have given below data gathered on the net amounts invested by the Foreign Institutional Investors and Indian Mutual Funds in the stock market during past 6 months to give you an idea now evenly matched are these categories of whole sale investors in the market.
Probably, I chose a period where the net investments have nearly marched each other. Especially if we knock first three days of trading done FIIs I find that their net investments in Indian equities to be flat (a near Zero). They bought till Oct 5th Rs. 9, 452 Crores.
| Month | FII Invest Net | MF Invest Net |
| In Crores | | |
| October 07 | 24,542 | (1,800) |
| November 07 | (7,345) | 2,165 |
| December 07 | 4,438 | 3,332 |
| January 08 | (11,283) | 7,579 |
| February 08 | 1,122 | 514 |
| March 08 | (1,891) | (1,578) |
| | | |
| Total | 9,583 | 10,212 |
The net amount as of March 17th , 2008 invested by FIIs therefore is a mere Rs. 132 Crores. The sensex during this period when the net sales by FII have been matched by Indian Mutual Fund net invested shows that factors that have driven the market down have very little to activities by these two large entities.
The volumes clearly tell as to how the day traders are not very active especially from the buy side.
Let us understand the cash collected by Indian Mutual Fund. It us reported that figure is at a all time high at nearly 15% of their assets (Rs 70 Billon collected as new offer subscription and Rs. 10.5 Billion cash they were holding as a part of their portfolio). Such high allocation to cash would only mean that the investment managers have a good play in the call money market. This is also partly true as there were several periods where the inter bank call money market went to higher levels of interest.
What next? Indian mutual funds cannot sit on the cash for ever. There will be a shift in the investor’s preference to the mutual fund offering. The new tax regime has allowed many to tone down their tax saving investments. The shift in the investment pattern and continued US Dollar (Economy) weakness will show up an interesting fight for turf amongst the FIIs and Indian MFs. The winner is likely to determine the market trend. The market is bound to get back to growth path sooner, therefore stay invested.