First Time we see Dichotomy between Strong FIIs Inflows and the Sensex Trend…A clear Macro Warning

SENSEX CLOSE IN 2009 : 17465..SENSEX LEVEL NOW AT 11.09 am,MAY 17,2010 : 16628

Down 367 points from Friday Close….but down 5% from 2009 Close   

  

FII EQUITY FLOWS AND SENSEX MOVEMENTS …A CLEAR DICHOTOMY IN 2010 

 Year

Net Investment US($) million

Sensex % Movement in the Year

2005

10707

42

2006

8106

47

2007

17655

47

2008 

(11974) Outflow

(52)

2009

17458

81

For 2010 till May 14, 2010

6148

(5)

 

 

 

 

 

 

 

 

 

Total FII FII Equity Investments : US $ 78.76 Billion

 

Registered FIIs :1714    Registered Sub accounts : 5369

 

India remains  a great Investment Destination…But have a look above….whenever we’ve seen huge FII Inflows,the Sensex has simply run away….in 2008 when we witnessed huge outflows,the Sensex sank,only to recover brilliantly when inflows topped US $ 17 billion in 2009

But 2010 has been a revelation…There is a clear dichotomy between FII Inflows and the Sensex…In Four and a half Months yet in 2010 we’ve seen strong FII Inflows of US $ 6.1 Billion…a strong part were in IPOs….one would have expected the Sensex to power ahead…Instead it has buckled 5% till date today from 2009 close

It’s a clear Macro Warning…India remains coupled to World Markets….the disturbing PIIIGS Solvency Scenario in Europe and the Debts and Deficits of USA continue to spook the Global World…It’s a contagion that’s being tackled

Beginning of the Year in January 2010,I had blogged that the Sensex range will remain in the 14000 to 18000 for the first part of 2010…when it touched 18000 a few weeks ago,I had given a  macro warning that we’re at the top end of the range and extreme caution should be exercise when playing the Indices or Trading…the onbly way to beat the Indices benchmark would be specific selections

Don’t get unnerved by this Volatility…it’s part of the Equity Experience….just stay focussed on Long Term Goals and Proper Asset Allocation when playing out your Strategy 

And I continue to reiterate,as I’ve been for a few years now….do consider GOLD strongly….it’s moved from US $ 650/oz to over US $ 1200/oz now….My first target was US $ 1000…it reached this late in 2009…Beginning 2010,I had said that Gold would touch US $ 1200 in 2010…it’s done so in May itself !…..My next big target is US $ 2500 inside a few years…..and then US $ 5000 !……given the huge uncertainties and poor visibilities in global economic recovery in USA,Europe and Japan…and the liquidity tightening in China to reduce fears of any Asset Bubble Formation…any Investment in Equity,anywhere in the World….and even in Debt,I daresay, should be done cautiously and with complete understanding of the Risks involved   

Very Few Believed me on my ‘Against the Trend’ calls for Equity,Gold and even Oil….been called an idiot a few times too in debates and discussion with Experts !…but then Contrarions are called Idiots quite Often !

To conclude…for the Long Term,I’m bullish on all three….Indian Equity,Gold and Oil….for the Short and Medium Term,there is a huge Overhang in Global Equities and Currencies….as I blogged a few days ago…Greece is bigger than Greece…India will feel the coupling effect….don’t be in any hurry to expend your Cash….unless you want to add or increase exposure to  Gold in your Portfolio…..you’ll probably get your scrips cheaper down the line 

As for existing Equity Portfolio…don’t worry as long as your selections are sound and your weightage allocation is sensible and rational based on your risk profile…so even if your Tracker shows realtime,your portfolio losing Value…stop looking at your Tracker ! 

Get into the discipline of thinking ‘Few Years’ and not ‘Few Days’ or ‘Few Months’!

Cheers !

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