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Nifty, Sensex may struggle to go up – Thursday closing report
Nifty may find support at around 7,750
 
We had mentioned in Wednesday’s closing report that Nifty, Sensex are likely to head higher subject to dips but Nifty has to close above 7,900 for the upmove to continue. The Indian stock markets closed on a flat note after range-bound trading in the day.
 
 
The Indian equity markets opened on a lower note on Thursday, following a sharp downward correction in Japan's Nikkei and US futures. The indices however pared their initial losses as investors squared up their positions on the expiry day of the September derivatives series. 
 
The Reserve Bank of India (RBI) will decide on whether or not to ease the key lending rates during its upcoming monetary policy review slated for September 29. Recent comments of the RBI governor is providing much of alcoe to the traders whether the RBI will cut rates and by how much.
 
Sector-wise, information technology (IT), consumer durables, healthcare, technology, entertainment and media (TECK) and fast moving consumer goods (FMCG) stocks supported the market recovery.
 
Notwithstanding the positive trend, capital goods, metal, banking and oil and gas sectors came under selling pressure. 
 
The S&P BSE IT index rose by 218.89 points, consumer durables index gained by 162.49 points, healthcare index increased by 127.22 points, TECK index rose by 94.72 points, and FMCG index was higher by 70.94 points.
 
The S&P BSE capital goods index receded by 150.40 points, metal index declined by 89.02 points, banking index fell by 71.21 points and oil and gas index was lower by 78.11 points.
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The closing values of the major Asian indices are given in the table below:
 
 
Among European indices, DAX was at 9,446.57, down 1.73% and the FTSE 100 was at 6,000.44, down 0.53%. US futures were trading 1% lower.

User

Mutual Funds buying more than match FIIs selling
Against a net sales of Rs25,000 crore by FIIs over the last five months, Indian mutual funds have invested more than Rs36,000 crore
 
Over the past five months, foreign institutional investors (FIIs) were net sellers on most occasions. FIIs sold nearly Rs25,000 crore of Indian equities between 1 May 2015 and 22 September 2015. The S&P BSE Sensex fell by 5.27% over this period. Over the same period, domestic mutual funds picked up Rs36,550 crore worth of Indian stocks. In the month of September (till date), mutual funds invested Rs6,073 crore in stocks while FIIs withdrew as much as Rs2,755 crore.
 
Despite a fall of 15% on the Sensex, from the peak in March 2015, the markets continue to seem attractive to Indian retail investors. But will the buying continue if the markets continue to face volatility?
 
Equity mutual funds have reported consecutive month of net inflows since May 2014. Though a large portion may be moving in to arbitrage schemes, retail investors sentiment does not seem to have turned negative as yet. In August 2015, out of the Rs9,156 crore that flowed in to equity schemes, about Rs900 crore flowed in to arbitrage and equity savings schemes. This means that nearly Rs8,000 crore flowed in to equity diversified schemes. This is despite the fact that in August 2015, the markets had posted the worst performance over the past four years.
 
In the six months period ended June 2015, as much as Rs33,780 crore flowed in to equity diversified schemes. Equity fund folios too, have been rising steadily. Over half a million equity mutual fund folios were added in August 2015, taking the total number of folios to 33.75 million. The number of folios has increased by nearly four million since August 2014.
 
This data shows that despite the volatile market conditions of the past few months, mutual fund investors have used this opportunity to buy more. This continuous buying by investors has buoyed the stock market. The strong selling by foreign investors is balanced by mutual investors putting money back.
 
 
But the big question remains—for how long, will the buying by mutual fund investors continue? In CY2008, the time of the global financial crisis, FIIs pulled out a massive Rs53,051 crore from Indian equities. In the same year, equity mutual funds reported a net inflow of Rs31,054 crore. But as the market continued to be volatile, is when the mutual fund outflows began. In 2009 and 2010, equity mutual funds reported a total outflow of Rs14,475 crore. Over the same period FIIs flooded the market with a net inflow of Rs2.25 lakh crore.
 
As the volatility continued, investors kept on selling. Between January 2012 and December 2013, as much as Rs25,994 crore was redeemed by mutual fund investors. Over this 24-month period, FII inflows were strong, bringing in nearly Rs2.42 lakh crore.
 
Therefore, if the current market volatility continues, we may soon see mutual fund investors turn into net sellers from net buyers.

User

COMMENTS

C N ANNADURAI

1 year ago

Dear Sirs,

Greetings. It is a good symptom that the Mutual Fund Industry has invested Rs.36000 crores than the investments made by the FIIs during the past couple of months.

This is a good sign of investment portfolio enthused by the Indian Firms and Publics.At the same time, redemption of investments within a shorter period is of a great concern. The investors must be taught to hold the funds for a longer duration so that the Industry will flourish and yield good returns to the investors over a period of time.

Regards,

C N ANNADURAI
ARN No 72403

mathai

1 year ago

when the mf are forced to sell, fii will not be there to buy . so another big fall in the stock market is imminent. which may last pretty long. and that is when the small investor will start losing his hard earned savings

Anil Agashe

1 year ago

The faith of retail investors in market is touching. I feel most of the money may be coming from HNIs!

V ganesan

1 year ago

T his time nifty PE may be reached around 16 to 18.In the earlier bull market everything moved up but this time only high quality stocks with hogh ROE MOVED UP .Most of the stocks already down 80 to 90 percent in the last 8 years.And one more thing is retail investors not investing directly in equities aggressively .I beleive market will not crack 50 percent from peak.Maybe 20 to 25 percent is not ruled out. But market may move sideways for very long period of time until earnings recover in a big way.No need to panic.Invest only in a staggered manner and dont trade frequently

Mohan Krishnan

1 year ago

Most of retail money into MF comes into Equity MF. Small part (HNI) goes to Debt. Most retail money is driven by sales pitch of Brokers/TV ads about SIP etc. Very few retail invest based on careful rational analysis. Most of them get carried away by snake oil salesmen.

This money tends to panic when the going gets tough. I already hear murmurs within family "Last one year I lost money via SIP. I want to redeem. SIP is a fraud to lure and milk small investors etc etc.".

FIIs on the other hand operate on Global perception where presently "Risk off EM" is the theme.

May be this is repeat of small guys becoming "bag holders" for FIIs.

Probability of Nifty going down from here is very high depending upon Global factors, panic of small Indian investors etc.

Historically P/E of Nifty at panic bottoms (2003/2008) has been around 10. If such bottom comes again then we are talking about Nifty around 4000.

Will have to wait and see. But prima facie it appears "Retail will never learn (anywhere in the World)".

REPLY

mathai

In Reply to Mohan Krishnan 1 year ago

risk of nifty touching 6000 is real. (4000 appears a bit far fetched. ) the small investor who entered the market at the peak is bound to lose all his savings. and that is history repeating at regular interval.
and sip will stand out as the biggest flop , if not fraud

mathai

In Reply to Mohan Krishnan 1 year ago

risk of nifty touching 6000 is real. (4000 appears a bit far fetched. ) the small investor who entered the market at the peak is bound to lose all his savings. and that is history repeating at regular interval.
and sip will stand out as the biggest flop , if not fraud

mathai

In Reply to Mohan Krishnan 1 year ago

risk of nifty touching 6000 is real. (4000 appears a bit far fetched. ) the small investor who entered the market at the peak is bound to lose all his savings. and that is history repeating at regular interval.
and sip will stand out as the biggest flop , if not fraud

mathai

In Reply to Mohan Krishnan 1 year ago

risk of nifty touching 6000 is real. (4000 appears a bit far fetched. ) the small investor who entered the market at the peak is bound to lose all his savings. and that is history repeating at regular interval.
and sip will stand out as the biggest flop , if not fraud

mathai

In Reply to Mohan Krishnan 1 year ago

risk of nifty touching 6000 is real. (4000 appears a bit far fetched. ) the small investor who entered the market at the peak is bound to lose all his savings. and that is history repeating at regular interval.
and sip will stand out as the biggest flop , if not fraud

mathai

In Reply to Mohan Krishnan 1 year ago

risk of nifty touching 6000 is real. (4000 appears a bit far fetched. ) the small investor who entered the market at the peak is bound to lose all his savings. and that is history repeating at regular interval.
and sip will stand out as the biggest flop , if not fraud

mathai

In Reply to Mohan Krishnan 1 year ago

risk of nifty touching 6000 is real. (4000 appears a bit far fetched. ) the small investor who entered the market at the peak is bound to lose all his savings. and that is history repeating at regular interval.
and sip will stand out as the biggest flop , if not fraud

mathai

In Reply to Mohan Krishnan 1 year ago

risk of nifty touching 6000 is real. (4000 appears a bit far fetched. ) the small investor who entered the market at the peak is bound to lose all his savings. and that is history repeating at regular interval.
and sip will stand out as the biggest flop , if not fraud

mathai

In Reply to Mohan Krishnan 1 year ago

risk of nifty touching 6000 is real. (4000 appears a bit far fetched. ) the small investor who entered the market at the peak is bound to lose all his savings. and that is history repeating at regular interval.
and sip will stand out as the biggest flop , if not fraud

mathai

In Reply to Mohan Krishnan 1 year ago

risk of nifty touching 6000 is real. (4000 appears a bit far fetched. ) the small investor who entered the market at the peak is bound to lose all his savings. and that is history repeating at regular interval.
and sip will stand out as the biggest flop , if not fraud

Dr Kavesh Patel

1 year ago

HISTORY OF 2008 MAY REPEAT.... BUT QUESTION IS WEATHER WE LEARNED FROM OUR PAST EXPERIENCE OR NOT ?

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