Sunday, January 20, 2013

Nifty Astro Technicals-A few Fundamentals

An interesting trend is visible in the article in this link..
A few extracts: 
".....Now, some signs are indicating that maybe, possibly, the tide is beginning to reverse.
Stocks started 2013 with a bang. For the week ended Wednesday, U.S. investors ploughed $18 billion into stock mutual funds and exchange-traded funds, the largest one-week total since June 2008, before the worst of the financial crisis hit....."

".... Fuelling expectations that a longer-term shift out of bonds and into stocks may finally take place is a growing nervousness that bond yields are dangerously low. As 2012 drew to a close, U.S. Treasury yields weren't far from record lows thanks to the Federal Reserve's unprecedented effort to pump money into the financial system through bond purchases. That sent prices up, and yields down….”
"...Emerging market stock funds attracted $5.83 billion of the net new cash in the week ended Jan. 16. Meanwhile, investors pulled $1.79 billion out of U.S. stock funds, the fund-tracking firm said.
Demand for stocks broadly speaking, has rebounded so far this year, with the latest inflows marking the second straight week in which retail  investors contributed new money. That has not occurred since April 2011, EPFR Global said. Last year, investors pulled $69.1 billion out of all stock funds while pouring $493.6 billion into bond funds, the firm added...."
Reading all of these together, 
  • People are perceiving bonds to be riskier going forward and are pulling money out of bonds.
  • This money  is finding its way into stock markets, where they perceive that the returns are far better in dividend yielding stocks rather than from bonds.
  • A substantial amount of money, out of bonds, is flowing into emerging market funds.
  • Indian stocks are considered to be a better bet among emerging market instruments, because the Government has been doing the right things in terms of attempting to reign the fiscal deficit, make foreign investors more comfortable with India,reduce subsidies,and re move bottlenecks in Infrastructure and projects investments. So more FII funds are expected to flow into our markets.  
  • Since the markets had been in an up trend for quite some time, money may flow into large caps and index constituents.
  • Real time economic effects are yet to be seen on the ground, but typically stock markets  react first and will front run the actual economy.
  • Government may continue this mode till the budget session. Post budget, they  will start taking populistic measures to appease the masses.This will have a negative effect on the markets and they will begin a prolonged negative cycle. 


  1. very nice suresh

    Keep up the good work :-)


  2. Thank you for your encouragement, Shriram.

    Warm Regards,