Sensex crashed 1500 points within 20 minutes of opening trade onWednesday, October 17, 2007.
Thanks to SEBI wanting to introduce restrictions on participatory notes ( P-Notes) .
What went wrong with P-Notes
Participatory notes are instruments issued by FIIs to entities that want to invest in the Indian stock market. Registered FIIs with SEBI can issue, hold or deal with P-Notes. Its a simple Derivative contract. FIIs issue these notes to investors abroad with details of scrips that can be bought and if the buyer agrees, they deposit the funds with the overseas branch of the FII.
FII will then close the transaction here by buying shares in India in its own account.So the details of the real investor is not known at any time.
FUNDS routed through participatory notes account for almost 42 per cent of the $8.3 billion invested by FIIs in the Indian securities market so far this year.
SEBI has proposed to curb Foreign Institutional Investors from issuing P-Notes for which it has sought public comments over the next four days. It has sent its draft proposal to major investment banks asking their opinion.
As part of the proposals, SEBI has suggested directing FIIs to wind up their current positions in P-Notes over the next year and a half, during which the regulator would review the position from time to time.
This has not been received well in the market.
Bad days are not over...It depends on SEBIs decisions.......
Suguna
Wednesday, October 17, 2007
Thursday, October 04, 2007
Where are the Markets going?
Indian equity market has been on fire for the last couple of weeks.From the moment Big Ben had made his decision, there has been a unbound optimism on part of Equity investors. It was no wonder that the sensex made it's quickest 1000 points recently and looking at the way it is going, it might as well break that record. Is this optimism based just on faith or is there a sound foundation behind it? Only speculative reasoning can give the answer.
The way Energy and Power sector companies like Reliance Energy and Tata Power have moved is just amazing. If you had invested in one of those companies about 20 days back, you would be sitting with handsome profits by now. The Entire pack of reliance group companies have led the way followed by traditional banking and Financial sectors. To an extent this move has been based on fundamentals, Indian banking and Power sector has tremendous scope for growth and a part of that is being reflected in the way these stocks have moved. The Foreign fund houses have also helped by bringing in quite a lot of money into the market.
What do we do now is a pertinent question every investor would have to ask himself.It is a difficult and futile exercise to predict the market, hence it is always better to stay safe. The question of concern is short term rather than long term. Long term investor can rest in peace, it is the investors who are looking at shorter horizons that need to make decisions. Have you invested in a company or in a stock, answer to that question will help in making your decision. Investors who have invested in a company based on it's strong fundamentals and the management are in a relatively better position than those who have placed bets just based on market movements. It will be an exciting month going forward, no doubt about that.
The way Energy and Power sector companies like Reliance Energy and Tata Power have moved is just amazing. If you had invested in one of those companies about 20 days back, you would be sitting with handsome profits by now. The Entire pack of reliance group companies have led the way followed by traditional banking and Financial sectors. To an extent this move has been based on fundamentals, Indian banking and Power sector has tremendous scope for growth and a part of that is being reflected in the way these stocks have moved. The Foreign fund houses have also helped by bringing in quite a lot of money into the market.
What do we do now is a pertinent question every investor would have to ask himself.It is a difficult and futile exercise to predict the market, hence it is always better to stay safe. The question of concern is short term rather than long term. Long term investor can rest in peace, it is the investors who are looking at shorter horizons that need to make decisions. Have you invested in a company or in a stock, answer to that question will help in making your decision. Investors who have invested in a company based on it's strong fundamentals and the management are in a relatively better position than those who have placed bets just based on market movements. It will be an exciting month going forward, no doubt about that.
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