Hi All,
I am sharing the blog after almost 6 Months. I was forced by data to write the blog, specially the volatility.
All those who are traders knows that there is only one true god of the market VOLATILITY, the trader who understand the volatility are the those 10% traders who make the money in the stock market. SEBI made sure that everyone focuses on 90 % of the failed traders with very great intention to protect the money of retail investors. Now a days we see the disclaimer after opening our any trading platforms.
Concept of volatility is the most complex parameter in the stock market followed by liquidity. I am not writing any of the topic in details but here my intention will be to touch upon the data points which suggests the market movements beyond the conventional fundamental and technical study of the market. In this blog I will try to cover the dynamics of the current Indian stock market with few data points.
We all know, that there are 4 main players of the stock market, I have mentioned in my previous blogs also. They are FPIs, DIIs, Prop Desk, Clients (Retail Investors). We will understand the assets under each of them with the help of following table.
source: NSDL, FPI monitor, category wise AUC data.
The above data table gives the allocation of the all the players in the Indian Equity market. Among them you can clearly make out who is the boss in the India Stock market. Here I will not give the categorisation, as you all readers can figure that out.
Another data suggests that FPIs holds 21% of overall holdings in the companies which makes NIFTY 500 while DIIs hold 14% all all shares in holdings.
These figures leads to another question that if the FPIs are only controlling the market then now a days, how come the volatility has risen to highest level? I would like to give the honest answer based on the data I gather on daily basis by tracking the big players movement in the market. This conclusion of mine can be completely wrong but yes there is bright chance that the conclusion is correct based on data points given below.
Among the FPIs, I am presenting top 10 countries with asset under custody (only equity), the data is for Dec 23 and Nov 23. Latest data for Jan 24 is not yet available.
Source: NSDL, Countrywise AUC data.
Referring the above table we can clearly see the US FPIs are holding the highest assets under their custody, that means AUC USA= 2.85 X (AUC of Luxembourg+AUC of Singapore) who are 2nd and 3rd highest asset holder under their custody.
In my view, Singapore, luxembourg, Japan FPIs are SUPER bullish on the Indian Stock market along with others. US FPIs are also showing that they are positive on Indian market, but now they hold more power to control the Indian stock market, as SEBI has removed the restrictions on SHORT positions in the market. It has been observed in the past that DIIs are the bulls while specifically US FPIs are the big bears of the market. This time singapore, luxemburg, Japan FPIs along with other fpis also have joined BULLs gang, cornering US FPIs to counter the game of shorts they play in consolidation phase of the market. Past records shows that market has showed sideways moves before central elections.
Considering that very same thing big players can only make the profits by shorting the market in Futures and hedging it with CASH. So we are observing the following data of FUTURE POSITIONS of the big players.
The above data suggests that FIIs are currently carrying 1,44,454 Future Index short positions while only 69,557 Future Index long positions. Surprisingly DIIs too are carrying 90258 Future index Short positions and only 56219 Future index long positions but in my opinion they are hedge for the tremendous cash buying they are doing in the market currently.
By just shorting the futures index, can US FPIs pull down the market against 3 other big players? Especially they know the INDIA GROWTH Story?
:-Yes, they can do so by selling in CASH market whenever is required.
For last calendar year, FIIs are net sellers in cash segment with selling of -43,757.2 INR Crores while the whole credit goes to Diis for their net buying in cash segment with buying of 1,36,152 INR Crores. The selling of Fiis is not at all worrisome as it is well within the limits of consolidation state of the market.
For this calendar year, Fiis are already negative with -35977.87 INR Crores and Diis are positive with 26743.63 INR Crores, this data is for Jan 2024 only.
Considering the data above, I can say that there is well expected TUG OF WAR in Indian stock market before elections, which gives the reason for High Volatility in the market. Indian stock market since March 2020, when Nifty touched 7500, has not seen the negativity and Index has grown almost 3 times in last 4 years. Macro economically India Story still has gas left, but one way up market is always alarming. Taking caution in these situations is never harmful.
The sharp moves in the market currently covering 200-400 points on Nifty in single trading session is indicator that match between big players is for domination on Indian equity market. This market is showing the deadly mood swings even in Intraday covering 60 to 100 points in just 5 minutes, which previously was a day movement.
With this I will conclude today's topic that, small investors/ traders like you and me should follow the strict rule of profit booking and stop losses in current market. It is not wise to have FOMO in this current market. I am not saying that market can turn super bullish or super bearish but It will be welcoming move if the market shows healthy dip. Which eventually may suggests consolidation phase for a while.
Open to all the suggestions/ Critics/ Praising to this information. Kindly share your thoughts in comment section.
DISCLAIMER: All the data given above is available in public domain, I have mentioned the respective source of the data. This is personal opinion based on data records which I maintain. This information is strictly for your information only. There is no suggestion of any transaction in any segment of the market.
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