Bulls of the Dalal Street once again managed to breach the 12,000-mark on Thursday, but the latest drive to this once-beaten milestone had less of foreign support that the Indian equity market has been getting through FII inflows.
An analysis of trading activities of foreign institutional investors during the past seven months -- when the market surged from 10,000 to 12,000 level; plunged below 8,800 and again jumped past 12,000 -- shows that influence of FIIs was much lower in the latest upward jump on the bourses.
The market needed a boost of about Rs 750 crore (Rs 7.50 billion) for every 100-point jump in the Sensex in the three month period between February 11 and May 10 -- when the 30-share barometer index had rallied nearly 2,000 points to its all-time closing high of 12,612.38.
FIIs had purchased shares worth a net of about Rs 15,000 crore (Rs 150 billion) during this period and were considered as the major driver of the upward surge on the bourses.
However, the FII boost for every 100-point gain in the Sensex dropped to about Rs 250 crore (Rs 2.50 billion) during the three month period between June 15 and September 14 -- when the Sensex jumped more than 3,000 points to return above the 12,000 mark in the intraday trade.
The Sensex had dropped to as low as 8,799.01 on June 10, after a sharp four-week plunge from a life time intraday high of 12,671.11 on May 11.
The sharp meltdown on the bourses was said to be largely triggered by huge sell-off by the FIIs, who sold net shares worth about Rs 7,000 crore (Rs 70 billion) during the May-June period.
The net purchase by FIIs between June 15 and September 14 is estimated to be worth about Rs 8,000 crore (Rs 80 billion), which is nearly half of the net FII inflow during the three-month period between February 11 and May 10.
Moreover, the FII inflow of 8,000 crore in the latest three-month period coincided with a jump of more than 3,000 points in the Sensex, as against a gain of about 2,000 points in the previous 3-month period under review.
However, the market observers said the shift in the FII influence could not yet be termed as a sustained phenomenon, as the foreign investors might again increase their buying activities in the Indian market towards the end of the year.
FIIs traditionally keep in a broader selling-mode during the May-October period, before they resume building fresh portfolio by the month of November, they added.
Brokers said the domestic investors -- retail as well as institutional clients -- have taken the FII sell-off as a good buying opportunity to build their portfolio.
65 days of labour for Sensex
The age-old saying about 'a rise taking much more hard labour and a fall being much steeper and faster' was once again proved right on the Dalal Street on Thursday -- with the bourses taking 65 days of labour to regain the level lost in just 24 days.
The benchmark, Sensex, once again breached the much-awaited 12,000 mark on Thursday, but it took as many as 84 days of trading on the bourses to regain this psychological support level.
After hitting the 12,000-point for the first time 105 days ago on April 20, the 30-share barometer index had last traded above this level on May 18.
The Sensex surged more than 100 points to hit an intraday high of 12,003.68 in afternoon trade today on the back of robust buying in a host of banking, IT and energy stocks.
However, the upward trail has been a longer one for the stock market as against the downward fall during May-June period this year.
The Sensex had to wait 65 days to scale an upward journey of nearly 3,200 points back to 12,000 level, from a low of 8,799 points on June 14.
In contrast, the Sensex had taken just 24 trading sessions to plunge more than 3,800 points to 8,799 level, from a life-time high of 12,671.11 on May 11.
The Sensex has managed to trade above the 12,000 level in just 18 trading sessions so far in its history.
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