Hello Everyone,
It is said that Fundamental followed by Technical analysis suggest the perfect directions about the stocks/ indices. Let's add one more parameter in it, LIQUIDITY. This liquidity has gained immense attention in past few years and it will grow as more and more in coming years for sure.
Keeping the same respect to the basic analysis of Fundamentals and Technicals, we need to keep the eye on Liquidity as it is deciding the market moods now a days. Now if you are keeping the eye on liquidity you need to keep the track on money flow of all 3 segments that are Cash, Future and Options. Market swings according to money flow in these segment in ultra short term and short term basis. For long term market only knows one direction, that is UP...
It is well known fact that market never follow same direction for long, Nifty made a low of 16945.05 on 24th March 2023 and has not looked back. We are now on 19457.3 on closing basis of 7th June 2023. Which is the rally of 2552.25 points, which are 15% in just 3 months time. Now this is really a wow factor but is this something we should fear of as market is not following the fundamental rule and dancing on the tune of liquidity which is provided by FPIs? or genuinely we are in BULL RUN? Can it be a election year EUPHORIA? Where are the news now of UKRAINE WAR and World Recession? These are some very logical questions come into the mind and then the real question comes and that is,
ARE EVEN FUNDAMENTAL AND TECHNICAL ANALYSIS EXISTS OR ONLY LIQUIDITY CONTROLS THE MARKET?
The big fish who controls the money flow are FPIs that I have already mentioned in my previous blogs. Throwing some light of their activity in the month of June 2023.
June Data suggests that FIIs bought around 27250 Crs while DIIs added up 4458 Cr on net basis. (source www.moneycontrol.com). Money flow from FIIs is positive since March 2023, and in May they invested 27856 Cr. in cash segment and DIIs were net seller with INR -3306 Cr. worth net selling in Cash segment only.
FPI AUC COUNTRY WISE (TOP 10) DATA:
Below are the TOP 10 Country wise FPIs data. We can clearly see the money flow which is coming to India all across the globe. Clearly with this data, India has become Seventh heaven for investments. Maximum inflow we can see from France FPIs where minimum is from Mauritius FPIs (in percentage terms per month basis).
This data is really comforting as far as the market movements are concerned. Now only the question is What has changed suddenly in last 3 months that all smart money is getting diverted to INDIA?
We can not deny that there is rush to complete the govt. project before this year end which will replicate in the election next year. The impact will definitely pass on to private players who are giving the services to govt. so in cascading effect we are sensing the corporate earning growth for sure. On top of it the report from bloomberg says that there is 0% probability that INDIA will go in recession. Now that is really promising.
SECTORAL SHIFT OF SMART MONEY from 15th June 2023 to 30th June 2023:
Utilities sector is clearly gaining the attention of smart money, followed by construction, financial services, FMCG and telecommunication. Below table suggest the percentage change in last column.
Below table is of TOP losers for the mentioned time frame.
Contradiction in above data if you notice is about construction sector where it is top gainer with around 6%. while Construction Material sector is in top loser list. Is CONSTRUCTION Sector will be on losing side here onwards? This is the thought to discuss.
With all the above data, Are we in BULL RUN AGAIN OR IT IS JUST EUPHORIA? Let me know your thoughts in comment section.
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