Perplexity Puzzles & Paradoxes...

"I like the stock market because it is the only place where people can go in a $100,000 car and park it in front of a $10,000 house."

                                                                                                             - Will Rogers

Very relatable for the current markets? I guess it is always relatable for any market situation, but when there is bull run then this effect will multiply due to FOMO in retail investors.

 

Nowadays people looking more for the news and data on the stock market, getting more lured by its AURA, and following blindly. Recent news of opening of 171 million DEMAT accounts which were more by 4 million than last month (July 24), and number is increasing suggest the retail participations in the Equity market.

There is nothing wrong or right in incremental number of DEMAT accounts, but the concern can be, those who are investing are they getting lured by bull equity markets? or are they interested in listing gains of IPOs? or are they getting attracted by derivatives for fast returns? or there is endless greed of making money in short time? In my view, the answer is YES to all the questions above. What more concerning is, new retail investors who are investing, are they doing the analysis or getting help of experts of investments or just investing because someone from close loop is investing? That is really hard to find out. 

Recent news of IPO where company were trying raise the fund of around 12 Crs but IPO got subscribed by 400 times shows pure greed of the investors.

I truly believe that equity investments can be done with 2 mindsets, one is with mindset of gambling and the other is making consistent money and growing the wealth. Now a days 1st mindset has become more popular. Yes I am saying it openly because without that the IPO news or listing gains of IPOs we could have not seen. The current listing gains investors getting are mostly due to demand and supply mismatch, of course there are good ipos but retail clients will hardly get them. 

It has been 3 years out of 5, since when I actually recorded the data on the daily basis, for the first 2 years data recording was not done in the manner that I am doing now a days. But in the recent past I have observed that big players (FIIs specifically) also maintaining the more liquidity than the previous days. They are also participating in derivatives trades with more n more number of contracts than usual. That may be for control of the market, when DIIs are floating with liquid cash.

When the markets are with full of liquidity, high PE ratios are common across the stocks. Currently market is facing the issue of overvaluation. Many stocks are really overvalued and has grown tremendously. Stocks specially from Mid and Small cap space are more overvalued than the stocks which are in Large caps. One important reason that Diis (MFs, PMS) houses are maintaining the liquidity under the full limits per category assigned by SEBI is because incremental money is coming but stocks are overvalued. There many and more stocks which have given more than 100% returns in single year from mid and small caps space, some of them are with really good fundamentals and good prospect as far as India's growth is concerned, On the other hand company like HDFC bank, which is fundamentally strong is showing range bound activity since last 3 years. 

Now coming to our title of perplexity puzzles & paradoxes.. In our zero sum game, perplexity puzzles are nothing but as below:

1. Should I invest in the stock market for making fast returns or for making consistent returns?

2. Should I invest in the stock market at such high valuations?

3. Should I restructure the portfolio to the undervalued stocks or keep the stocks for longer term so that  I can also be part of the stories that if you have invested Rs.100000 in 2010 then you could have made this......?

4. Should I just replicate the PMS or mutual funds stocks in my portfolio and make the returns  accordingly?

Paradoxes will be:

1. Market returns are humongous, irrespective of the valuations, indexes are showing ATH after regular intervals.

2. Invest in any  major stock floating around the groups, stock is just giving back the returns irrespective of the fundamentals and technicals of it.

3. Invest for short term either in small caps / in micros or even in penny stocks and IPOs for huge profits in short time because of the recent past is with great experience.

4. Invest, invest and invest as market is in bull run.

These are common talking points now a day as a wealth managers we are facing, may be more but not less.

If you see closely, even in confusion and decisions, greed factor is majorly driving the sentiments of specially retail investors. I am not blaming retail investors for the greed factor as market has performed really well in recent past. From last 4 years, markets are just touching new highs in regular intervals.

Recent past has showed us that there is no limit to even growth of the stock price in bull run, in that conditions the TRUE RETURNS of the equity (XIRR) which are in the range of 12% to 20% depend on the category, does not make any sense, which is why the expectations of even retail investors who were looking for 15% growth rate are gone up to 25% to 50% returns of stock investments.

For all of the 8 points of confusion Vs. stubbornness, the decisions will be taken by investors with their individual mindsets. So there is nothing right or wrong relying of our own individual thought process as far as it is restricted to individual portfolios. But as far as markets are concerns I must say, Perplexity Puzzles and paradoxes is restricted to retail investors only. For big investors, when there is big money at risk, there is no confusion to follow the right valuations of the stocks. Irrespective of the fundamentals, technicals and future growth of the company based on the govt. budgets, big money will always respect the valuations of the stocks.  That is why so many fundamentally good stocks irrespective of their growth and future order book are showing negativity. And same is the reason the sectoral shifts are happening on faster pace from big players.

For overvaluation of the stock and money outflow from Fiis, I would like to give the example of the shipping stock- Cochin Shipyard. The stocks touched 52 weeks high of  Rs.2979.45 in the month of July 2024. Which was 369% returns in just 1 year if invested in sept 2023. 

Now currently stock has fallen by 38.36% from its 52 week high value. Of course gain vs. fall in one year suggests still huge profits in falling stock. Also fundamentally stock is very good. Let me remind you, govt. has allocated similar funds or more to shipping sector in this current financial year too. 

So here the dilemma for retail investors to those who have entered a year back is 'to hold or sell the stock'. For new investors or short term retail investors /traders dilemma will be as the fundamentals are good, technicals soon will touch the strong support should we buy for up trend as it may go back again near to its 5 week high. 

WHAT A PERPLEXITY, "Kya karu kya na karu ye kaisi mushkil hai...."

Now lets see what big players are doing. Last quarter FIIs reduced their holding by 0.29% while prop desk has reduced the holdings by 0.24% in last quarter. while mutual fund houses have added the holdings by 0.04%. So Net outflow from big players is -0.49%. Let me remind you again about the strong fundamentals and promised govt. expenditures for the stock and sector.

** I am here not suggesting any trade activity in the mentioned stock but want to show how valuations plays important role for the prices. 

Coming back to data, lets see the data which I share on monthly basis of big players activities.

1. Sectoral Shifts:

                                                Data source: NSDL FPI monitor  

For the 1st fortnight we can see the negativity in the month of Aug 2024, while second half of the month was positive in terms of inflows. Telecommunications, information technology, services, consumer durables were among the top gainers while selling happened in miscellaneous stocks.. 

2. Countrywise FPI monitor:

A welcoming move by NSDL, they have added another column recently which suggest equity mutual funds investments of  country wise FPIs. Singapore FPIs showed confidence in Indian Stock market while Japanese FPIs were negative in our markets. FPIs from Ireland chosen safe route of investment in equity via mutual funds.

Source: NSDL FPI Monitor

 3. Monthly FPI Net investments:

Here too, more elaborated data from NSDL, they are showing the mutual fund allocations in all categories along with AIFs of FPIs. Data Suggest we are still positive as far as FPI money flow is concerned.

That is all from my side for this blog. Please do share your feedbacks/ comments/ critics/ mistakes in comment section. Share this blog with others if you find valuable. Lets help another retail investors for making good returns in Equity. 

Disclaimer: The data taken for the analysis is publically available and you can cross check it with your own capacity. No transactional suggestions in any segment of the market with this blog. Please take the expert advice before any action in stock market. I am sharing my personal opinion and this is not from any institutional research deck.

  

Hariyali Hi Hariyali... Changed Dynamics of the ZERO SUM GAME..

 

" It's far better to buy a wonderful company at fair price, than a fair company at a wonderful price."                                                                                                                                   - Warren Buffett.

The quote says it all. Honestly in my opinion the most basic lesson of the stock market across the globe starts with this quote. Investors who can able to search such wonderful companies at fair prices are the investors who are the most experienced one in the stock market. 

BUT,,,, how to invest in such wonderful companies in the BULL RUN, specially in Indian stock market? as the bull run is going on since April 2020, when Nifty showed levels around 7500. Currently we are looking of NIFTY levels at 24500, around 3.26 times than the covid time. Many more stocks has given over 1000 % returns in these 4 years, People who are in direct touch with me and the readers of this blog, must be knowing what I am telling here. 

Since we are all the part of the journey of the bull run of the Indian equity market, the above question of knowing the undervalued stocks remain at Numero Uno.. Currently there is tide of fear about overvaluation of the Stocks in Indian Stock Market. If you are following any analysts or news channels the targets given by the analysts for their suggested stocks are now very less and not even more than 10%, in fact in some cases i realised it that they are actually talking of 5% or less target for their suggestion. Every Mutual fund houses in spite of huge money flow, are cautious and most of them suggests the overvaluations of the mid and small caps. With all this, how to go ahead with our own investment journey is the main topic across the Investors...

In my opinion overvalued is very relative term in the stock market. Overvalued index, overvalued sectors, overvalued stocks, all are getting judged with the previous history of returns, comparison is normally with time horizon. It is never judged on the basis of inflows and outflows of the money. 

If the stock has grown up by multiple of 4, will that stock come under overvalued category? In my opinion it depend on what is the future growth prospect the economy, sector and inflows/ outflows in the stock. I will try to give the example from my own portfolio here. 

Dynamatic Technologies Ltd. (Readers of close group, this is repetition for you, as already shared this data for learning purpose):

This stock was identified by me on 16th Jan 2022 (Sunday) during my stock analysis and I entered in the stock on 17th of Jan 2022, very next day. The price at which I have entered was 2290, For 11 month that mean till Nov 22, the stock was in consolidation phase but with bullish sentiments, real break out came on 23 Nov 22. In recent past it touched 9082.9, which is its 52 weeks high.

Sorry for the quality of the above screen shot, but you can check the dates i have mentioned.

Currently the stock is trading the on 6700 level, which is 25.56% drop from its 52 weeks high. On personal level i have trimmed my positions on 8400 levels near around 2nd of April 2024. After which it has reached to its 52 weeks high on 8th April 2024. Now if someone asking the question that is this valuation of 9082.9 very high? At that time, my answer was YES because of the run of the stock which is around 3.96 times than my price. The reason of trimming down the position here from my own portfolio was to book the profits as I am retail investor I can use this profits for many other reasons, But this time my timing of booking the profits were fortunately correct as on 8th April 2024, HDFC Mutual fund sold its 1.51% of the stocks out of their total 7% of company stocks holdings, and on 29th of May 2024, Sameena Special Situations Mauritius Fund (FII) sold around 4.75% out of their total 8.18% of the stock holdings. The results we can see with the fall of 25.56% in just 4 months. 

So after this sell off, in the month of April and May, my answer to the question of the stock being overvalued, created 3 more questions, 

1. Whether Big players has squared off their complete holdings? 

2. Who were the buyers for such sell off

3. Should I book the profits completely and not partially?

After answering these question may be the answer to main question will be clear.

To answer the above 3 most crucial question, lets see the facts about the stock.

1. The company is with very high quality fundamentals,

                                            Data source: Trendlyne.com

Concentrate on growth of operating profit, operating profit margins, Net profits, Basic EPS and Basic EPS TTM.

2. TTM PE Ratio is below industry median, which is around 38.52

3. Valuation wise, 25.56% correction in the price and still correcting is good sign and I will consider this as opportunity in buying in the dips, for such fundamentally good stock.

4. Moneyflow is suggesting that Still 6 Fiis and 1 Mf house (HDFC MF) is still holding the stock. 

In fact, retail participation is declining along with MF house as it must be a profit booking with such great returns of 3.96 times in 2 years, but institutional and Fiis participation is still on advancing stage. Fiis has increased their stakes from 16.5% to 17.1%. which is positive point for retail investors like me.

5. Negative to positive growth in sales and profits is still giving comfort in falling stock price. 

Finally to answer the main question about the valuation of the stock, in my opinion Stock is still attractive provided if you know when to enter. There are many other factor to consider the reentry,  keeping Price valuation at Numero Uno position as the stock has given already multibagger returns. 

Disclaimer:- THIS IS MY PERSONAL OPINION, I AM NOT SUGGESTING ANYONE TO ENTER IN THE STOCK AT ANY VALUATION, I HAVE SHARED MY PERSONAL PICK AS AN EXAMPLE FOR LEARNING PURPOSE ONLY. 

After taking into the consideration of the fundamentals, technicals and money flow of the stocks it comes to the step up parameters of sectoral shifts, FPI money flows in the respective sectors. 

After General Elections, market has gone up with strong positive money flow from FPIs, Data is showing the bullish sentiments of foreign investors. Lets see the details

TOP 10  Country wise FPIs movements:

                                            Source: NSDL FPI Monitor.. 

Except  FPIs from Japan and Ireland who are negative in money flow all others and top 8 FPIs showed positivity of around Average of 8% from the May to June in total equity AUC (assets under custody). Mauritius, Canada and Luxembourg showed extra faith on India stock market and its valuations irrespective of the OVERVALUATION fear in the market. US FPIs are also bullish, as of now which is welcoming for Indian Stock Market. 

Fortnightly Sectoral Shifts (FPI Investment data):

                                                 Source: NSDL FPI Monitor.

Top Gainers from the above list are as below: 

Diversified sector investment is new favorite for FPIs followed by information technology, consumer services, Utilities, construction materials and Oil gas & consumable fuels. If investors are holding the stocks from these sector then clear indication whether to hold the stocks or not in "OVERVALUED" stock market, of course investors should consider that the rate of change of the sectoral shifts from FPIs has been gone up in recent past. To keep the portfolio in green, investors should look these kind of data frequently especially when the stock market is driven by liquidity along with fundamentals and technicals. 

Tops Losers from the main list..

Textile sector is major loser in last one month especially last fortnight (from 30th June to 15th July 2024) suggest major sell off in the sector which is of 10.91%. Metals and mining sector is 2nd losers from the list. 

Now here I would like to touch again our topic of DYNAMATIC TECHNOLOGIES LTD. (DYNM)

If you relate the sector data to the profile of the company you will get little direction of the possible price action stock. 

DYNM is manufacturer of engineered products in aerospace, automotive, hydraulic industries in India, UK, US, CANADA. This company comes under consumer discretionary sector in Auto Components industry. If you see what FPIs sentiments about Automobiles and Auto components, till June 15th 2024, sector has gained 10.26% of money flow from FPIs, where as from 15th June to 30th June 2024, it has showed negativity of -1.16%, In my personal records, Automobile and auto component as sector has gained around 31% of FPIs allocations since 15th Feb 2024, that is in last 6 months. 

It is now up to the readers judgement if the Dynamatic technologies ltd. stock is overvalued and one should avoid to enter or vis a vis. 

FPIs Monthly Net Investments:

This data as of now is actually making investors smile as it clearly suggest the bullish sentiments of the FPIs. 

                                           Source: NSDL FPI Monitor.. 

If you see the Indian Stock market, there 2266 listed companies on NSE where as 5309 listed companies on BSE (Data as on Jan 2024), Not all are overvalued, and many of the companies like above are overvalued but waiting for JUDGEMENT of the Budget which is on 22nd July 2024. 

Recently one of the vintage investor and analyst Mr. Shankar Sharma was answering to the question raised about the overvaluation of the market and correction expected in the market. He gave some facts about the factorization effect in the stock market, where he was saying that, if major unknown event is happening like covid, lehman brothers, Harshad Mehta scams, then market do will react abruptly and correction will come until that fear will not goes off, but once these events are also known to the market and if the event is happening 2nd time then market will just react to it for a bit but will not correct drastically. To support this, he gave the event like war, where he said if anyone observed that war news are constant in the world, but is markets across the globe are factorising the news constantly. 

So to those who are reader to this blog, they know that I follow the big players religiously especially FPIs, and currently FPIs are not only bullish in CASH segment but also in FUTURE Segment. And as said by Mr. Shankar Sharma, as of now, there is no news across the globe which will impact Indian stock market negatively. 

In my opinion Investor should not worry about the correction or over valuation of the stock market, but they should worry whether their portfolios are in line with current changed dynamics of ZERO SUM GAME of the stock market. 

Try to understand that Big players (FPIs, promoters and promoter groups of the companies, institutional players, MF and PMS houses) do not consider the drop of 1000 to 2000 points in the stock market (INDEX) as correction, For them it is just the opportunity to restructure or rebalance their portfolios, but for retail investors like us 1000 to 2000 points on INDEX means people normally gets panic attacks. 

I am sure as retail investors will mature with the experience, their portfolios will perform in more subtle way. 

That is all in this blog, let me know your thoughts, feedback, critics, in comment section below.. If you want me to cover any specific topic under this knowledge series, I will try my best to give the justice and present it here.

**Disclaimer**: 

All data that I have shared above is publically available in the domain site which I have mentioned as source. Readers can cross check and cross verify the same. All the analysis and conclusion is done on personal level, there is no institutional research involve in the same. I am not SEBI Certified analyst. 

Kindly do not take any buying/ selling/ holding positions in any segment of the market based on the above data. Consult to your own financial advisor/ analyst for any decision that you want to make in the stock market.

YIN & YANG TUSSLE : A MARKET'S COSMIC COMEDY OF BALANCE..

 

I always wonder about the quotes and the personalities who quotes, that what made the person to say/write such quote and how they can be common to any situation related to crux of the quotes. Like in above quote the main crux is POWER.. Well the above quote is the exact topic of today's blog. 

Yes, yes this blog is related to market data only but trying to focus the devil in disguise in Indian Stock Market. 

We all know the big players who actually controls the market. They are FPIs and DIIs. They are YIN and YANG of the market. The question is here is who is YIN and who is YANG? Yin represents feminine, cold, dark and passive power while YANG represent masculine, light, warmth and dominating power. 

I vote, that FPIs are real YANG of the stock market in INDIA. They are the devil in disguise as well as the friends to those who understand them very well. I will prove this with data below.

Market Confusion:

But why I am relating this concept of YIN & YANG to FPIs & DIIs? 

Recently during the Indian Central Election results we all felt some heat of the big players, few got rewarded while many got scared and punished because of the heat of the big players. 

If someone is arguing that long term investors do have the impact then why long term investors are selecting the investment options which giving the higher returns, why they do not want convention investment option which give returns of debt investment? Why there is always race between mutual funds and PMS houses to showcase the returns? Observe carefully, the highlights are how our investment option is generating the ALPHA (excess returns, it may be of 1 or 2 % over others).

The drama of Election results actually went to its peak on 3rd June 2024, when market jumped to its new all time high. Market (NIFTY) showed positivity of 3.25% on that day, the reason was given by media was exit polls which were in favour of ruling party. This is true to all extent also about reports from media, because on 4th June, the result day showing complete different picture than exit polls. Market reacted to that very strongly. Market slipped by -5.93%. So even for the long term investors, investing money in the equity market on 4th June 2024, in any form would have made more sense than investing money on 3rd June 2024 on the basis of exit poll results. Investors of 4th June clearly got the discount of 5 to 6% on an average than any others as of now. 

Our YANG showed more dominance again, Fiis added Rs.6850.72 Crores in cash segment while Diis added Rs.1913.98 Crs. on 3rd June 24 and very next day Fiis and Diis sold around double than previous day which was Rs. 12436.22 Cr. and 3318.98 Cr. respectively.

FPIs also created 65733 future index long positions by squaring off the 55690 Future Index short on      3rd June 24 as they were positive in cash market, while next they on negative sentiments of the market due to unexpected mismatch may be, FPIs created 35545 Future index shorts positions squaring of nominal longs. Diis played exactly same with the figures of 10000 future index long on 3rd June But  squared off 11144 Future index shorts, which ideally shows that they were trying support the market by doing short recovery of future positions, 

Market danced to the tune of the FIIs again. I tried to explain my level best about who was dominating and who was supporting the market. To your surprise this game is going on endlessly that Fiis are making the first move and Diis are countering it. In my opinion if DIIs wants to control the market then they should make first move. But they will not YET. The reason will be clear with the following data points.

Recently I had the constructive conversation in my circle, about the inflows and outflows. Yes now a days it has been very important to consider the liquidity. I got opposed on the thought of FPIs still dominating the market, The argument was, Fiis no more controlling the market, Our SIP book only has grown to 20371 Cr. in the month of April 2024 from 13728 Crores of March 2024. The inflows from domestic investors has grown significantly and direct participation in the equity market has grown drastically. 

All are true, the data from amfiindia.com suggests all the figures are very correct. But the question remains that whether this inflow is sufficient to counter the moneyflow of FPIs? The answer is BIG NO. Let's find out how:

Amfiindia.com suggests that mutual funds AUM (asset under management) book in India has grown to Rs. 57,25,898 Crores from Rs. 9,45,000 Crores, in the span of 10 years, That is huge jump, It has grown over 6 times in 10 years. I have dissected further with the help of NSDL. 

                                                                   Data as on May 2024.

 This data shows all the domestic players who are active except NRIs and OCBs investments which normally are routed through either direct equities or occasionally with the help of local players. 

   **For both tables, Figures are in INR Crores. The data has taken from NSDL. The data is as on May 2024.

The second table represents participants under Foreign Investors. The picture gets more clear here. 

The difference of INR 19,04,454 Crores in Equity market makes FPIs, YANG. With this data, I must say that, for DIIs, "DELHI ABHI DUR HAI"..

Coming to our regular data, let have top to bottom approach. 

Net Monthly FPI Investments:

 Source: NSDL

Overall FPIs are bearish as we can see the outflow of  INR 25862 Crores from Indian equity market. Interestingly they are not negative on overall basis and we can observe the inflow in other markets. This is giving some confidence as negativity in equity market can be due to the big event of elections. Further data ahead will give more clarity during the year.

Countrywise AUC Data:

Top FPIs were happy by maintaining the neutral stance for the Month of May 2024. 

There was hardly 0.2% change in total top 10 FPIs total numbers in comparison with last month. US, Singapore, Ireland, Canada, Japan, Norway FPIs looks still positive but inflows has definitely got affected with respect to previous months.

3. Fortnightly Sectoral Shifts:

Whatever the positivity by Top FPIs suggests the buying across many sectors in this month. In the month of April 2024 we saw huge negativity.

Source : NSDL

Below are the gainers and losers:

Gainers:-

Constructions, Capital Goods, Realty, Telecommunications are the favourites of favourites. 

IT consistently suggests outflow from last few fortnights, Consumer services, FMCG have joined IT. This may be election results as mentioned in my previous blog.

This is all for this blog. Leave your thoughts, feedback, critics in comment section. Lets grow together.

** Disclaimer: The data given is publically available data. Its is taken from nseindia.com, NSDL, amfiindia.com. The analysis and interpretation is based on personal observations and data records maintained on personal levels. Kindly do not take any trade based on the above data in any segment of the market. 

HAPPY INVESTING.... 

"Indian Stock Market Roller Coaster: General Elections Fuel FPI Volatility, Leaving Investors Wary"

 

Well said by well known American Economist W. Edwards Deming that, "WITHOUT DATA YOU'RE JUST ANOTHER PERSON WITH AN OPINION". 

I always wondered why he has not added without data INTERPRETATION. Now a days, data is available on just a click, the real problem starts with efforts to collect the authenticate data, maintaining it and interpreting it. Previously no one was even talking about FPI data so frequently but now even small investors talk about it, Unfortunate part of it is, they talk only the language of their influencers.. So now a days it will be appropriate if you say 'Without data interpretation of your own you are just another person with an opinion of others. 

In this blog, I will just try to give little bit more data than previous blog, of course from the authentic sources. I will also share my opinion but I request you to please interpret this data at your best of the capacity. You can also cross check the data and point out if I have made any mistake in the analysis. 

Picture this: FPIs swooping into the Indian market like Heroes in a masala movie, ready to shake things up with their foreign funds and fancy suits. They bring money, they bring excitement and most importantly, they bring a whole lot of drama!

One day, FPIs are showering the market with love, buying up stocks like they're going out of style. The next day? Well, let's just say they might as well have disappeared into thin air faster than a magician in a magic show. And your portfolio is left wondering, "was it all just a dream?"

But, who can blame them? FPIs are like cool kids at the party, sometimes they're all in, dancing on tables and making it rain rupees. Other times, they're just ghosting the scene faster than you can say "SENSEX". 

Fortnightly Sectoral Shifts: 

I am sharing the data for 2 fortnights here as previously fortnight data was not presented due to late updation of the data from the source. It covers the data from 15th April to 30th April 2024 and from 30th April to 15th May 2024. Reader must look at the data in continuation which will suggest current confused scenario of the stock market. 

Source: NSDL

    

I want you to capture the +Ve and -Ve signs in the % change column of the above table. One questions arises here AISA KYA HUA 15 DIN MAIN KI HALAT HI BADAL GAYE?? 15th April to 30th April was lovely positivity, Market touched 1st ATH (all time high) of 22775 (NIFTY) on 10th April 2024 (2nd ATH which is current ATH on May 03,2024, which is 22794.70- NIFTY.). Then for next 15 days, lovely negativity. Nifty levels came down by 3%, that are around 691 points.

Below table shows the winners and losers. 

Winners First:

Losers:

The highlighted losers were net winners in the last fortnight. All are negative in this latest fortnight by either same gain they had previously or greater than that. I guess FPIs either realized that they made mistake by investing these sectors as the elections are yet not over or they are just playing ultra short term in the market. Quite unusual behaviour of smart money.

If you notice closely, Automobile and auto component sector was hot favourite of FPIs from quite some time, while Chemical sector is replacing that position for FPIs. While they are hating IT since very long. Forest material as sector showed negativity after the positive run for quite some time. 

Realigning the individual satellite stock portfolios with big players at high valuations of the market always make sense. 

Country Wise FPI Money Flow:

This data is not available for the current month that is May 2024. Looking at the data till April 2024, This data should give smile on investors face. 

                                                                Source: NSDL

This data shows that FPIs from Canada, Japan, Norway, Singapore, Mauritius leading the table of the Net investors of Indian stock market, as all have contributed in investing. For the month of May 2024 we can get to know only after the end of the month.

Monthly FPI Net Investments:

This table gives the idea about what FPIs are upto. FPIs looks negative in equity investments but the money has moved to debt, debt VRR and hybrid investments, net basis FPIs looks positive towards Indian economy for sure.

 Source: NSDL    

*For May 2024: figures are captured as on 17th May 2024.

Equity CASH Segment:

Except March 2024, FIIs are taking out the money from Cash segment of Indian stock market. 

Fiis are net SELLERs in the cash segment with -1,18,729.46 Cr. worth net selling from Jan 2024 till date while Diis are net BUYERS in the cash segment with +1,58,646.42 Cr. worth net buying for the same period. Clearly we can see that Diis are managing to control the market as of now, while Fiis showing the negativity in cash segment but positive on overall Indian market gives confidence to the investors. As we know that election is the event which decides the sectoral shifts and money inflow and outflow, this negativity of the Fiis from cash segment of Indian stock market may be for rebalancing and restructuring of their portfolio. 

Fiis monthly figures in cash segment are as below:

Jan 2024: -35977.97 Cr.

Feb 2024: -15967.72 Cr

Mar 2024: +3314.47 Cr.

Apr 2024: -35693.19 Cr.

May 2024: -35532.47 Cr. as on 17th May 2024.

*All data is from personal records, recorded daily from www.nseindia.com and www.moneycontrol.com

Rate of selling is way higher in the month of May 2024 as it has already crossed 35532 Cr. If Fiis still are selling in the cash segment then that will be highest figure since last 7 months. 

I always face the question that why I always follow FIIs and not DIIs, when DIIs most of the time in the recent past are successful in maintaining market high. Also there is lot more data available that Diis which includes mfs, pms houses are gaining a lot more inflows than ever in terms of equity investments.

The reason is very simple, Diis are not allowed to participate in derivatives actively, they can only take the hedged positions in the derivative segment. They are not at all participative in the Option category of derivatives except for very less times, like once in a blue moon. I have been maintaining the market data since many years in row on daily basis, I have observed that FIIs will always work on the Valuations of the market, so be it indices or the stocks. If they are looking market has become overvalued they will somehow manage to pull down the market, and yes they do not hesitate to take down the market by using Future short positions. Below is the reference of current situation in Indian derivative market, especially futures, as options are used for pure hedging purposes.

INDEX FUTURES SEGMENT:

The Long to Short ratio of future positions has its own significance in the future market, probably worldwide. This ratio has proven strong record points that Fiis somehow follow the limits of the ratio. In the past when the ratio is in between 0.3 to 0.4, which means long positions are less than short position and is in between 0.3 to 0.4 ratio, market has shown the reversal and market has came up. Similarly when the ratio is between 3.9 to 4.5, that means long positions are higher than short positions and is in between 3.9 to 4.5 ratio, market has shown the reversal and came down. This long to short ratio is of Index Future positions. This is not a written rule but it does have 80%-90% probability that this limits will be respected. It has proven in the past on many instances. This data can be recorded from nseindia.com on daily basis for FIIs, Prop Desk, DIIs and in any combinations in them. I personally give lot of importance to FIIs LS (Long- Short) ratio. and keep watch on prop desk data too. This gives lot of help to understand the undercurrents of the market. 

Currently, as on 18th May 2024, Fiis LS ratio is around 0.39, It touched 0.36 on 16th May 2024 and shown reversal on 17th May 2024.Currently Fiis are carrying around 407071 Index future short positions out of which around 313232 Index future short positions are big short positions that means more than around 1.75% of the total future index positions are made in single day. This if you calculate in terms of open interest, then it comes out around 7500 open interest (open contracts) made in single day. This 1.75% figure also come with the observation from the past records and do not have any mentioned record by any certified analyst. Fiis are currently carrying 160596 Index Future long positions out of which 107248 are big future long positions (logic is same for the word 'big'). Below table will give you idea of LSR (LONG SHORT RATIO) movement.

                          Data Source: nseindia.com,  Analysis: personal data records

This data is useful for those who wish to read the undercurrent of the market. With this data, unlike technical chart readers who just say If market touches this level than this will happen or that will happen, one will know the best probability of the market directions along with real support and resistances of big players. Certified Analyst use all the information of the data present along with the charts and fundamentals.

So currently if index future short positions are way higher than index future long positions which tells that big players (Fiis) are carrying bearish sentiments, and there is possibility that market can show the reversal as the limits of LSR shows 0.39. I am just suggesting the possibility here, just take the note of the possibility because on the other hand there is still room for LSR 0.30. It all depends on what is happening on coming near future.

Overall, with the above data, I only say that investors should be vigilant and enter in the dips and traders should be more cautious as national event of elections is showing tremendous impact of mood swings of smart money.

Leave your suggestions/critics/appreciation in the comment box below. Share the link if you find this blog adding any value to your existing knowledge of Indian Stock Market. Let's try to be always in profits together in the journey of creating wealth......

**Disclaimer: The data I have given is taken from the sources that I have mentioned above after each table. It is publically available data. I am not suggesting / recommending any positions in any segments of the Indian Equity Market. Please do not take any positions in any segment by just referring this data. Consult your own financial/ investment planner before investing. 

HAPPY INVESTING.......

 

Lakshmi Chanchal hoti hai.. Churning at its best from FPIs...

Human mind always reluctant to the constant change, but those who adapts the changes constantly, are the most successful people in the world. May be that is why we worship to the most fickling goddess Lakshmi..

I am here relating the constant changes to the churning in the portfolio. Recent past has proved that the active fund managers in specifically PMSes has out performed the other pmses, not marginally but with the huge difference. If anyone arguing that they have got the boost of the bullish market then point to be noted here that this was the same condition for every fund managers.  

The ancient phrase of "Lakshmi chanchal hoti hai" always fits so well in the stock market. Not even only the stock market but money flows like water where there is ditch (low valuations in terms of asset classes). We always have seen the money moving in between stocks, commodities, fixed income, currencies etc.

In this blog, I will try to cover the movement of foreign portfolio investors money in the stock market, which was significant after many months. The reasons for the churns can be logically, the forthcoming elections and financial year ending. Irrespective of the reasons, noticing the changes will aid investors/ traders stock portfolios. 

Fortnightly Sectoral Shifts:

Month of March we have seen Nifty moving up and down by almost 3% negating the overall effect, but if you see the graph below, we can clearly relate the movement of Nifty price with the data which I am presenting. Here I am making the assumptions that FPIs have gain the control on the stock market again irrespective of the market participation of retail investors, DIIs, and prop desks. That simply means the trend is now regularized.

Presenting below the sectoral shifts for complete month of march for relating to this graph. The purpose of sharing this is purely to focus on the idea of following the market movers, which normally retail investors misses out in the journey of making money from the stock market. 

                                                              Data source: NSDL.

This data publishes every fortnightly. Notice the % changes of the sectors before 15th March 2024, only 3 sectors received the inflow from FPIs they were Telecommunications (11%), FMCG (2%), Chemicals (1%). Rest of the sectors experienced major outflow. That is when the market was at low for the month on 19th Mar 24. Post 19th Mar 24, market showed the positivity and covered the dip. At the end of the March 24, we can see that only 2 sectors that are IT (-10%) and Media entertainment and publications (-2%) were negative. Utilities and diversified sectors gained percentage double digit inflow of the money, while Automobile sector showed sudden positivity after Oct 23.

Normally it has been observed that these kind of movement are very rare and money gradually comes in and goes out from the sector, but as I said, FPIs are keen on the big event and probably wanted to restructure the portfolio, making align to the most probable winning sectors, I have mentioned in previous blog about few sectors like automobiles, FMCG, consumer services etc. are the favourites of big players during the election events. 

With this the top 5 gainers from above and losers are as below. 

   

Countrywise FPI AUC monitor: 

                                                                     Source: NSDL

This data suggests that there was slight drop in monthly money flow from the top FPIs, French FPIs were among the highest with drawers followed by Japanese FPIs. Singapore FPIs are supporting the Indian stock market big ways as usual, while USA FPIs (sharks of the stock market) were also slightly more positive about Indian Stock Market.

Monthly FPI Net Investments:

This data suggests macro picture about the money flow of FPIs. It clearly suggest that still FPIs are way behind in covering the negativity in the Indian Stock market. So there is still room left for positivity in the stock market. April data is till date data.

                                    

                                               Source: NSDL

Leave your thoughts/ feedback/ Critics in comment section and share the blog to all who want to know and grow. 

Disclaimer: The data shared is publically available and from the personal records, I have mention the source of the data each time. I am not suggesting to take any positions into any segments of the stock market, this data and conclusion can be completely wrong. 

Election Rally... What Data Is Saying??

 

Hi to all stock market lovers,

After 2 months of tremendous volatility, now market is showing little numbness in volatility index, Index Vix touched to 17.66 and now on 13.61. With lowering of India VIX, market is touching ALL TIME HIGH (ATH) every other day market made sure that the retail investors will remain in confused state.

No, this ATH is not the sign of bull run. We have recently experienced that in bull run, your portfolio will be in the green most of the time, but currently investors portfolio is either neutral or in red as small and mid caps are in the tremendous fear of down move. Unfortunately, investors have avoided FOMO factor by adding excess small and mid caps in their portfolios. Recently invested direct equity investments are definitely bleeding, but investors those who have opted for the safe routes of MF are still maintaining the portfolio alpha (excess returns).

Looking at the market, currently it looks like market is exhausted by the current run, big bears are constantly testing the waters, they have tried in recent past to move the market in negative direction but they have failed for sure. The best part of the big players is, unlike retail investors they change the bus and the direction according to the market mood very quickly. Previously FIIs were bearish and in the last 2 months they were constantly selling the CASH segment.

For the month of January and February 2024 Fiis were negative with the net selling of Rs 51940.6 Crs. DIIs absorbed that selling with net buying of Rs. 52123.93 Crs. 

For the month of March 2024 Till date, both FIIs and DIIs are net buyers with net buying of Rs. 10128.15 Crs. and Rs. 13898.99 Crs. 

For the last 6 months FIIs were net sellers with selling of around Rs.39191.25 Crs. While Diis were net buyers with buying of around Rs.114582.38 Crs. 

*All the data given are from moneycontrol.com and personal data records, recorded from nseindia.com on daily basis.

It is always observed that whenever big bears wanted to move the market downwards they create negative positions in futures followed by options and then cash, with no rules on short selling they were actually in position to create the huge future short positions and they created it also. 

In the month of Jan 24 bear FIIs were carrying around 1.25 lakhs of open big short positions (positions made more than 7.5k in single day, that comes roughly around 10% in single day) in Futures, they tried hard by creating the options bearish positions and selling the cash till Feb 2024, but they got very heavy competition this time and they failed in directing the market in negative direction. 

In the first week of the March 24, this month, FIIs are currently carrying only 53k big future short positions and they have closed the rest in the losses. This is not surprising, this pattern in recent past have observed many times even during the state elections. Indian stock market is definitely showing the positivity with the highest ever participants in the market. In my previous blog I have mentioned the Top 10 country wise FPIs and their AUCs (assets under custody), I have also mentioned the who are the bears and who are the bulls from FPIs league, This time bear FPIs have faced the rough patch due to bulls in the stock market.

Moving to monthly data of FPIs which includes FPI monthly net investments, FPI's sector wise shifts and AUC wise FPI change in the investments below.

1. AUC Wise Top 10 FPI data:

This table shows the view of FPIs for the last couple of months.

         Source: NSDL, FPI monitor

France, Japan, Singapore FPIs were super bullish for the month of Feb 24 while Canada FPIs prefered profit booking from Indian Equity market. For the percentage change please refer the table.

2. Sector wise FPIs movements:

                                                Source: NSDL, FPI monitor

 This table successfully gives the idea that what big players are doing in which sectors, Please find below the top 5 gaining and losing sectors in below tables:

                                                         Source: NSDL FPI monitor

Reality segments is gaining the attention again followed by capital goods and constructions.

Capital goods, constructions, construction material, Utilities and telecommunication sectors if you observed closely were losers in previous fortnightly data.

                                                       Source: NSDL FPI monitor. 

Media entertainment and publications leading the losers table turing positive to negative in the last fortnight. Oil gas & consumable fuels, IT has also joined the league of positive to negative movements for the fortnight. If you have gone through my previous blog you will get the answer that why media entertainment & publications, oil gas & consumable fuels are negative. IT in my opinion is continuing the struggle with small ups in the past. 

3. Monthly FPI Net investments: 

                                                          Source: NSDL, FPI monitor.

This table is self explanatory and no explanation needed. 

This is it for this blog, reader can connect the dots to get the answer of the first question, Is market data suggesting any election rally? Share your answer in comments section along with feedback/ critics/ suggestion/ doubts. Let all get the knowledge apart from the news and good story telling about the forecast of the stocks based just fundamental and technical data.

Disclaimer:- This all data is given from my personal records which are recorded timely from the source mentioned above. The interpretation of the data analysis is purely my personal opinion and I may be completely wrong. Do not take any position in any segment of the stock market based on the above data. Reader can cross check the data as it is publically available data.

This blog is humble attempt to present the data that normally retail investors do not go through easily. By tracking this data, I am sure portfolio alpha can be always maintained with correct rebalancing and restructuring of the portfolio.

HAPPY INVESTING.....