• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Port Info

• Ships in Ports
  
  

Archives

• Yesterday
• Datewise
• Resources

Group Sites

• The Hindu
• Business Line
• The Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Jayanta Mallick

Some Japanese and Korean funds are understood to be gradually increasing their stake in Indian equities, while a clutch of hedge funds are becoming more active in the local market in search of better returns.

THE last few days of FII investment figures in the cash and derivatives segments of the market threw up a few interesting trends.

The overseas funds seem to have increased their level of activity in the derivatives segment compared to the first week of September. Comparative data suggest that FIIs have hiked their level of activity in the derivatives - both in the Nifty and stocks futures - by eight to ten times from the first week to the last week of September.

On the other hand, though their net investments in the cash have come down over this period, their actual buying and selling level has shown a marked rise.

According to the SEBI data, the net FII investments on September 30 were Rs 133.40 crore against Rs 371.40 crore on September 1. But, gross purchases and sales figures went up to Rs 2,377.40 crore and Rs 2,244 crore respectively on September 30 against Rs 1,313.10 crore and Rs 941 crore respectively on September 1.

Two inferences could be made from these: One, because of recent volatility and dip in sentiment in the benchmark indices, a section of FIIs in the short-term is preferring to be active in the derivates for relative safety and lesser commitment. Two, some of the overseas funds have got into trading mode rather than long-term investments.

The trading strategies also indirectly indicate certain play of hedge funds, which generally thrive on volatility.

The last few days of trading also signalled that domestic mutual funds have been buying aggressively in equities and their level of net investments has gone up substantially. It could be for the compulsion to show better NAV or buying at lower levels, particularly for mid-cap stocks, or combination of both. But the important signal for the retail investors is that mutual funds may continue to be buyers for battered mid- and small-cap stocks with good fundamentals in the market.

This week, the market may reinvent opportunity in the sound mid- and small-cap stocks if the mutual funds show the way.

With eight per cent plus GDP growth prospects in the air, the interests of the overseas funds are likely to grow further. Some Japanese and Korean funds are understood to be gradually increasing their stake in Indian equities, while a clutch of hedge funds are becoming more active in the local market in search of better returns. All these bode well for the benchmarks indices.

In a pre-quarterly results rally, the cement and IT stocks may participate. All eyes are glued to the advance tax payments by corporates as an indication of growth before the July-September results are out.

It seems the concern over regulatory actions and global crude price has temporarily passed over the stock market.

But, Iran's nuclear issue and its reference at the UN Security Council may influence the crude price and the stock markets world over in the coming fortnight depending on the final outcome.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
DCM Engg to hike grey iron castings capacity

Copyright © 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line