Friday, August 5, 2011

LESS FII INVESTMENT IS BETTER FOR STOCK MARKET


AN ARTICLE AS APPEARED IN DNA MUMBAI ON 30-09-09 UNDER THE CAPTION MARKET MANIPULATION, BY K A PRASANNA IS REPRODUCED HERE.


R. Jaganathan views on ‘Why India may get lucky once again’ was excellent. (DNA 28-09-09).However certain points are overemphasized. The markets movements are although an indicator of the health of the economy and confident booster for potential investors - both local and foreign, the stock indices are some times misleading and confusing. We have seen how one Harshad or Ketan can take the markets to dizzy heights by pure manipulation. Because of slow down in US and European economies, FIIs may prefer to invest in the emerging economies like India, China and Brazil. But, for a country like ours too much FII investments in stock market is fraught with danger. Our stock market /small investors are not matured enough. When FIIs start investing heavily in markets here the indices goes over the roof, the small investors being caught unaware. During the buoyancy without understanding the dynamics of the markets they make investments and soon they realize that they have entered the market at the wrong time because the so called FIIs who were responsible for the indices to hit the highest point, start withdrawing/selling their investments, once their desired percentage of return on investments are achieved leaving the small investors in the lurch. (FIIs are not charitable institutions who help small investors to lead a comfortable life). Once the small investors’ confidence is shattered no market will hold for long time. And we will be back to square one.

4 comments:

  1. Sir,
    what are you views on 3i infotech.

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  2. Sir without FII's I guess our DII's strength maybe around BSE @ 8000 pts..Ur views on India's indexes actual strength minus FII's and a few scrips which in current scenario are must buys..Thanking in advance

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  3. Too much FII money not good in the long run.

    ReplyDelete