The FII problems are there and their economic conditions are not resolved but are not incremental in their nature. The FIIs pulled out of nearly 15000 crs. from our Indian equities but their appetite seems not over. The leveraged liquidity from the top economic counties like US,UK, Japan, Germany , France and other sound countries have indiscriminately irrespective of their investment value chased the stocks in emerging markets with a tag like BRICs. The domestic investors in those countries failed to think in contrary but accepted as a god sent opportunity, invested at very high levels. The scheme designed by FIIs run as per their plan, then started pulling their money from equities to PE placements in real estates and the other debt instruments. Now when every body noticed the fact then these FIIs resoted to sell in the exchanges to make the prices fall further to create a panic situation, add fuel to fire started chanting the basic principles of P/E ratios and the high valuations.
The real-estate investments will give multi bagger opportunities to these FIIs & the foreign companies after 5-6 years as they could grab the prime locations in the top metros of our nation. The economy will get its strength and the policy changes will help them to open shops & mall first in single brands and later in multi brands. The logic can be traced with simple arithmetic calculations like averages. Suppose a person with long-term vision and plan who could influence the markets can dictate the terms like what the FIIs are doing right now. The basic principle is same to every body but who follow and make others to follow the foot prints is the matter. The Person who bought DLF at IPO range at Rs600/- price, 200 shares cost Rs 1,20,000/- and sold 100 shares of DLF at 1100-1200 range can now buy 450-550 shares. So the average cost his total 600 (500+100) shares cost is 1,60,000/- only. The same is the case with RCOM, RIL, REL infra, Relcap and so on.... This can be spread to any number of blue-chip companies. The real loser is always the retail investor and the day trader who speculates with ones great mind and ability to satisfy the inherent ego and to make a foul cry on the circumstances that made his/her condition.
The policy actions are inducted to infuse liquidity but on the other hand we are making our selves fatten to be cut by these FIIs feast of selling at the higher level. In case the above discussed situation unfolds then our markets will stick to sub 2500 levels by using a branded glue stick for a longer time than anticipated. This will become a boom to the FIIs to sketch a different plan after some years when the memory of the retail investors fades.
The India Sovereign Fund concept will kill the spirit of the value discovery mechanism underlined in the open market rather than a system that functions on the controle of Government. The markets are increasingly getting the influences of the vested interests operating on a global scale. The political compulsions, populism measures for power rather than the long-term sustainable economic gains once controlled the policy decisions but now the global village being controlled by the president though every country is a sovereign by definition.
The long designed plans are not understood unless we view them with holistic approach to news headlines. The greed for global crude controle made Iraq devastation and surprisingly the heads of the nations talk on peace measures with reconstruction activity so is our civil Nuclear deal no less than a big business opportunity for a “stagflation” flagged world big economy. The doors of the Indian defense deals to global tenders are about to open as a competitive bidding process for better treasury gains. So is our port buildings and fast lane rail tracks….and so on…
