Momentum investors lead the markets - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Momentum investors lead the markets

Jun 17, 2000

The foreign investors (FIIs) are shying away from the markets. This is more than evident from the net sales of over Rs 4 bn effected by them this month. On the other hand, another breed of investors has replaced the FIIs as the key buyers in the markets. The momentum investors. After having been preempted by the FIIs, they have returned with a vengeance. In fact, as is apparent from the graph (Momentum investors fuel the rally…) they have contributed, and in no small measure, to the sharp rise in the Sensex during June. FIIs on the other hand were booking profits (they had turned big buyers a couple of days before the rally commenced).

In recent weeks we have been consistently harping on two things that may affect valuations in stock market – inflation and exchange depreciation. The finance minister has recently stated that there is no need for a hike in interest rates. He is also of the opinion that the depreciation of the Rupee is no cause for worry as he feels that inflows will pick up. Soothing talk. But with inflation continuing its upward trend (now with even higher oil prices the situation may worsen) the pressure on the central bank to cool down demand will be intense. Then there is the issue of a large government borrowing programme which to complete would require that higher yields be offered (to maintain real returns). In such a scenario a hike in interest rates seems to be the only answer (though not immediate but surely in the medium term).

In case of the depreciation of the Rupee, the trade account position is likely to worsen on account of the surge both the volume and value of oil imports. The import of crude is likely to jump from 45 million tonnes to 70 million tonnes (Reliance Petroleum went on stream this year), and that to at much higher prices, which are showing no signs of cooling off. Although software exports will cool off the deficit, there will nevertheless be a deficit in the current account. Probably the finance minister is just being optimistic. Or maybe he knows something that the market does not. Let’s hope so!

Equitymaster requests your view! Post a comment on "Momentum investors lead the markets". Click here!


More Views on News

Top 5 Recent IPO Developments You Should Know (Views On News)

May 12, 2021

So far in 2021, IPOs in India have raised nearly US$ 3 bn, the best start to the year since 2018.

How Did Mindtree Perform in Q4FY21? (Company Info)

Apr 20, 2021

Here's the rundown on the company's latest quarterly results.

How the Regulator Is Ensuring That You Can Make an Informed Decision When Investing In Debt Mutual Funds (Outside View)

Jun 17, 2021

SEBI recently introduced a dynamic scheme classification concept of the Potential Risk Class matrix for debt funds based on interest rate risk and credit risk.

Top 5 Stocks Mutual Funds Bought and Sold in May 2021 (Sector Info)

Jun 17, 2021

A look at what India's top equity mutual funds bought and sold in May 2021.

Why is Bullion so Volatile Now? (Fast Profits Daily)

Jun 17, 2021

Why have gold and silver prices become volatile recently? Find out...

More Views on News

Most Popular

Hotel Stocks Will Reward Investors (Fast Profits Daily)

Jun 8, 2021

This is why I'm bullish on the hotel and hospitality sector.

My 'Unlock' Investments (Fast Profits Daily)

Jun 11, 2021

The best unlock investments you can make in the market.

The Most Visible Sign of India's Revival is on Two Wheels (Profit Hunter)

Jun 9, 2021

Investing in the best stocks could result in wealth compounding on a massive scale.

How I Discovered a 400-Year-Old Open Secret to Extreme Wealth (Profit Hunter)

Jun 11, 2021

Charlie Munger's open secret about investing success.


India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms


Jun 17, 2021 (Close)