Mumbai, May 15: It’s a nervous weekend for market movers as they wait and watch for what Monday has in store for them.
The honeymoon seems to be over for foreign investors too, who have been busy dumping Indian stocks this week. On Thursday, the net sales figure touched Rs 604.40 crore to take the cumulative net sales for the month of May to Rs 2,178.50 crore.
The big question is how much did the foreign institutional investors sell on Friday. Market estimates revolve around Rs 1,000 crore, as the market regulator’s figures are yet to be published.
The sell-off triggered by the turnaround in political equations shaved off a huge chunk of the shareholder wealth on Friday — Rs 1,02,109 crore.
After two years of honeymooning, FIIs are suddenly viewing India with suspicion. Statements on privatisation by Left parties made investors — sitting on a pile of PSU stocks awaiting divestment — jittery.
Foreign investors fear the reform process may also hit a roadblock. The institutions have released numerous research reports on the election results.
“The market fears are unfounded,” says Rakesh Jhunjhunwala, a high-networth investor and a prominent BSE broker whose views on the markets are taken very seriously on Dalal Street.
“It should settle around 5000, plus or minus 200 points,” he added.
Others are not so sure. “Lot of supplies have come from the FIIs as they unwound positions. Most of it came from hedge funds. If it continues, the margin calls from banks could increase,” says Venkatesh Iyer, director at R K Chari Stock Broking, a BSE brokerage.
“It has to stop somewhere. Except for PSU shares, no major impact in other sectors is seen,” he added.
Portfolio managers are rushing to dish out new ideas in line with the changed scenario at the Centre. Companies in the pharmaceuticals, infotech and manufactured exports will be the next big bets, they say. These sectors are insulated from government policies and they are expected to gain after the markets settle down.
Mutual fund managers and a few portfolio managers are also looking at opportunities as some of them are sitting on 20-25 percent cash. “I think, this is fun for those who are sitting on cash,” says a portfolio manager of a premier wealth management firm that manages portfolios for high-networth investors.
Nobody knows when the selling by FIIs will stop. In the short term, there is a lot of uncertainty surrounding the markets. But fundamentally, corporates continue to do well.
There are four forces that will dictate the markets direction, says Ved Prakash Chaturvedi, CEO of Tata Mutual Fund. Policy stability, the monsoons, international scenario which impacts the rupee, interest rates and first quarter company results .
He believes that answers on three forces will be available by June. The three factors that would be known would be monsoons, a few corporate results and policy issues. If these forces are encouraging, one could expect a reversal in trend. But market players are not betting that the trends would bring back the sensex to the old levels with the same speed as it came down.