How?

FII participation till August-2010 was more than 60,000 Crore and The current year's figures participation is just closer to the all-time high of $17.6 billion, recorded in 2007, just before the markets crashed because of a global recession.

The memories of 2007-08 are still fresh, when the FII participated heavily till a point of time and then suddenly started withdrawing. Last year the net inflow of FII was around 83400 Crore which will has been already breached and if the momentum is upbeat 1, 00,000 Crore is what the anticipated, with 2 active months to go for the current year ending.

Reliance Industries which is having the highest weight on the bourses was 1100 + when we were trading 10% below the current indexes level, since then the stock has depreciated by almost 10% but the market has gained 10%. There are other stocks also, for whom the prices observed the same trend.

In the mean time everything has escalated to newer highs right from real estate, petro products, commodities and what not. Real estate is booming like never before, the rates are more as standardized and there seems to be active lobby of builder community to jack up the prices. In areas around the city you have a standard rate of INR 18000 Square yrd. And more you move towards the city and within the city the prices are as high as 65000 square yrd.

The prices of residential scheme rise with each passing day, as if there is no tomorrow, I don’t know what is signifies but “Everything can’t go parallel”, that’s what I believe. If one sector is performing well other has to be compensate to maintain equilibrium. If all the traded commodities are scaling up then does it means there is enough demand in the market? Well I don’t think so. This is a fictitious situation created by market players.

I don’t know how to deal with this but the proposition all around doesn’t seems very competitive

Image source: vpmath.wikispaces.com

Stop at Nothing

Each passing day market is breaching new records and attaining new highs. The indices have already crossed the resistance level and are very close to the magical marks, with the future contract already crossed that magical mark as they are getting traded at a premium as compared to the cash price.

All traders and investors are speeches and clueless about the rally, the only people who are expressing there comment are the market analysts; according to them there is still a lot of steam left in the market and market will scale to new highs.

If you ask me about the reason of the current rally, I don’t find any concrete reasons, happenings, news that might have contributed to this rally. The only factor for the rally is FII. If we see the contribution of FII’S, FII’s pumped Rs 83,400 Crore into the domestic equities in 2009, but started exiting in early 2010. And the remaining trend for the year is as below,

Month	Net Position	Net amount
January	Sellers	-500 Crore
Feb	Buyers	1,216 Crore
March	Buyers	19,928 Crore
April	Buyers	9,361 Crore
May	Buyers	586 Crore
June	Buyers	27,125 Crore
July
August	Buyers	11,687 Crore
Total	Buyer	60,477 Crore

Analysts believe that the Indian market is likely to attract more inflow from overseas in medium to long-term investments, as they see higher return from emerging economies. This means we do expect more money getting into the stock market, which means that 24,000 level for Sensex and 6300 for Nifty is not far away.

In between the DII's are net sellers only also the mutual fund houses are registering heavy redeemption of the funds as investors are of a opinion that the market has already gain it;s all time high and might see correction in days to come.

Image source : thehindu.com

Wake up.. Bears!!

A strategy which I’ve adopted and rigorously followed in major of my decision is “Plan for the best and, be prepared for worst”. Even through the project management experience I have learnt that “If anything is to go wrong it will”. So the plan should be to achieve the goal, but simultaneously followed up by a backup plan or a contingent plan.

In the recent, I was having a conservative outlook towards the market as there was a lot of uncertainty regarding the direction to which Indian market were heading. I was having more of bearish feeling then bullish and that’s the reason my short positions were predominant and were hedged with less long position.

As a part of my strategy every time when market touched new highs I exited my long positions while holding the short positions in anticipation of a correction. Each time market made new ,there were no clues of market correcting; on top of that, exiting my long position increased my risk exposures, I again took few long, to hedge any upside and again the same story got repeated.

I was more of bearish because of the global events from last few days were not so encouraging, as/such as Japan continues to face the deflationary situation as the yen became stronger against the United States dollar at about 83 units, a 20 years high level, another news from Ohio which states about new policy enforcing a ban on outsourcing of all IT and back-office projects to India by government departments. Which in turn is bad news for IT companies as this decision is anticipated to have a ripple effect of other states decisions and may follow the same league.

Instead, all news got discounted by the market and the upside continues, with each passing day my sentiments are turning to be bullish now. But I’m sure that the moment I switch my positions from bearish to bullish, the market will change its direction and I will be left in utter mess.

Down trend which is known as bearish trend is far from sight, I feel that Bears has gone for the process of hibernation; but actually bears do not actually hibernate they fall into a deep sleep called torpor. Even bears living in warm climates do not undergo torpor, but like all bears, they sleep a lot. I’m sure that the bears will weak up and empower the bulls and we will see some correction in days to come.

Because; if anything is to go wrong it will.

Image source: lynnswansonstudio.com

Costly Love & Killer Affection

I love risk proposition; interested to enter risk based instruments and commit money on such contract, I like speculating the things for which decision is expected. Recent such commitment was for the TRAI (Telecom Regulatory Authority of India) decision pertaining to the Number portability. Though the implementation has to be made before 31st Oct, but I’m sure that it will not go as planned. The reason for my belief is that there have been at least three occasions when the deadlines were extended and this time also it will be extended by few more months. My commitment to this contract is beyond 31st Dec-2010.

But this sort of contract, occur as a result of off the line discussion and are not sufficient for my risk appetite. In my constant hunt for the risk based instrument, I ventured into a new of kind of stock market instrument i.e. “Writing option”.

I have tried buying call and put option many a times but never tasted success, though the indices were more or less towards my opted call/put price but not enough steam left in the market to cross those strike prices with heavy margins. My diagnosis was right but the prescription went wrong. As a result of which the current prices of my call and put were trading at a lower prices as compared to purchase prices. Contract reaching the expiry added more to the losses as premium for call and put options started eroding with each passing day.

But this time I wanted to take the premium of such contracted and decided to write a call. There were some clues that market has some steam to touch new high but will end up correcting heavily. But since my purchase, a correction seems to be ruled out and premium for my call has doubled amounting to huge losses.

Call options are more In-The-Money if the stock price goes higher, and if one sell a Call option and the underlying stock price goes down below the option's strike price (the option becomes Out-Of-The-Money), the option will expire worthless. And one can pocket the profit earned by selling the option. Which is exactly what I intended to do.

However, what happed was entirely reverse, these contract are infinite risk as the call price can rise to infinite. The real danger happens when the stock price keeps climbing and if it keeps going up, it will never become worthless, and near to expiration day someone is going to exercise the option and buy the stock from the seller who has earlier sold at a cheaper price as compared to today’s price. The seller is now in a heavy loss. Unfortunately the seller was me.

In a nutshell this article and experience is worth 4,000 bucks. Anyways I’m still interested to write the same call which has doubled by this time, at the same time I also admit that My love towards risky proposition is proving to be very costly and affection towards equity instrument to be Killer.

Let see if this works as per my expectation and will pray for a steep correction in the market.

POLICE

P for Polite
O for Obedient
L for Loyal
I for Intelligent
C for Courageous
E for Eager to help

Anywhere in the country the only state justifying the abbreviations of word “POLICE “in its entirety is “Gujarat”. The state known for its entrepreneurship skills, business community, best infrastructure, woman liberalization, rich culture and heritage has well transplanted the ethical code, good practices among the Police Department. Policemen give due respect to the citizens and are always eager to help, right from the traffic police to the Sheriffs, they purely serve public.

I have visited many states/parts of the country but I have not found in any state, the machinery of police being so genteel, so friendly to approach, so helping!!

But this onslaught of leniency has its price too… people take them for a ride!! People violate traffic rules even if a cop is standing on the other side and observing him. Overtaking from the wrong side and intercepting from any direction is a normal practiced behavior and not only this, if someone is caught violating a rule he gets into the argument till he is out of breath. Many people try to flaunt their contacts when caught breaking the norms.

Cops getting abused, manhandled and threatened are very much a part of deal than a daily affair. There are cases, where offenders even tried to run down the policemen with their bikes or cars!

Mostly the offenders are well educated and from well to do families and if you think that that men are brash, the women were no less abusive, ‘fairer sex’ took unfair advantage of the situations. Totally unarmed cops, without backups and interceptor vehicles are easy targets to the offenders who just don’t want to follow any rules.

I realized that the cops may be at fault sometimes, but it's the public who is more responsible for the mess on the roads. Such insensitivity towards traffic system is a public nuisance. Public needs to observe the rule and abide by the law, no matter there are cop on the crosses or not. Discipline and respect towards the law and partaking systems has to come from within.

Driving is a thrill, but one should learn how to behave with the engines..

Image source : skyscrapercity.com