| Author |
Message |
kulman
Senior Member
Joined: 02/Sep/2006
Location: India
Online Status: Offline
Posts: 9319
|
   Topic: Does this bull market need foreign money?
Posted: 05/Jun/2007 at 3:22pm |
Originally posted by basant
The days when our markets would move on the basis of local domestic flows are not too far away from us. I would put up the details on the same on the relevant thread!
|
The big boys of the Indian mutual fund space are getting even bigger with five top players alone accumulating assets worth over $52 billion (over Rs 2,10,500 crore) in the industry, whose combined wealth has soared past $100 billion mark (over Rs 4,10,000 crore).
The cumulative assets under management (AUM) of the country’s 32 fund houses rose to Rs 4,14,171.60 crore at the end of May, or 17% rise from Rs 3,50,280 crore in April, data available with Association of Mutual Funds in India (Amfi) shows. However, it is the five biggest fund houses — Reliance, ICICI Prudential, UTI, HDFC and Franklin Templeton - which together cornered total assets of Rs 2,12,339 crore — up 16% or about Rs 30,000 crore from the previous month.
The AUM of Reliance MF, which further strengthened its position as the largest AMC, stood at Rs 59,143 crore, up 21%.
Besides, ICICI Prudential follows with an AUM of Rs 50,703 crore gaining 19.95% from April’s Rs 42,267 crore. UTI MF stood at Rs 40,070.16 crore, followed by HDFC MF at Rs 36,146.66 crore and Templeton Rs 26,276.35 crore. Meanwhile, five smallest fund houses — Quantum, BoB, Escorts, Sahara and Taurus MF — could garner only Rs 772 crore of AUMs. (source: dna money)
Edited by basant - 05/Jun/2007 at 4:36pm
|
|
Life can only be understood backwards—but it must be lived forwards
|
 IP Logged |
|
|
|
 |
|
xbox
Senior Member
Joined: 10/Sep/2006
Online Status: Offline
Posts: 2001
|
Posted: 05/Jun/2007 at 7:33pm |
Well!! Foreign money is important source of bull market. Domestic money always comes at top. 
|
|
Don't bet on pig after all bull & bear in circle.
|
|
IP Logged |
|
|
|
basant
Admin Group
Joined: 01/Jan/2006
Location: India
Online Status: Offline
Posts: 18403
|
Posted: 05/Jun/2007 at 8:08pm |
The arguments listed below could indicate that Indians would not make a top but sustain it for quite some time. Surely the guy who gets in last will make a top but with every correction the amrkets has looked like giving way but has then stopped and continued its bull run. The reasons are plenty:
1) With a young professional getting into work he has no memory of Harshad Mehta and ketan Pareikh and hence that stigma of stock markets being a gambler den will diminish over a period of time
2) Most private banks have people waiting to pounce upon you the moment you visit them with NFO offers and SIP programmes. This is bound to get aggrevated.
3) Insurance plans have a major component of the premium designated for the equity markets.
4) CNBC TV18 and Awaaz and a number of other business channels have made information dissemination very easy. Inspite of the TAU's and the FAU's people have a readymade advise to take and that makes following the investments very easy.
5) WIth greater level of literacy people will jump on to the equity bandwagon.
|
Current GDP |
Rs 40,00,000 crores |
|
Financial savings rate per year |
16% |
|
Financial savings pool |
Rs 640,000 crores |
|
|
|
|
% of savings allocated to the market |
2% |
5% |
10% |
15% |
|
Allocation to the markets at a base case savings of Rs 640,000 crores. |
12,800 |
32,000 |
64,000 |
96,000 |
|
Flow of equity over the next 5 years |
64,000 |
160,000 |
320,000 |
480,000 |
|
Percentage of Indians in Equity investing |
3%-5% |
|
Comparable equity participation in developing markets |
10% to 50% |
|
Total stock of Foreign holding in India |
Rs 650,000 crores |
- The proportion of Indians that Invest into the Capital markets is less then 5%. This figure is bound to go up further.
- Potentially Indians have an option to add a amount equalling the current foreign holding into the equity markets
- During the epoch Harshad Mehta boom the proportion of Indians who were invested into the equity markets was 13%.
The chart above indicates the level of incremental savings now let us take a look on the consequences if the current savings pool flows into the stock market.
- By 2010 the total Indian household savings will be Rs 18,00,000 crores. Even if 10% of that were to come into the stock market it would be an inflow of Rs 180,000 crores.
- The total assets with the Indian household are Rs 45,00,000 crores. A 1% shift in favour of the equity class means an inflow of Rs 45,000 crores and a 10% shift indicates an inflow of Rs 450,000 crores.
- The comparable equity exposure figures in the developed nations are more then 50%. That is the primary reason those countries create policies that favour equity markets - at least they try to. Being in such predominent number the democratically elected governments would not do anything to disturb the equity investors.
- Most of the Indian households still prefer to slash away their money into Banks and other Government deposits.
- Indians shall be paying an estimated amount of Rs 100,000 crores as Insurance premium whereas the amount that they bring into the stock market is less then Rs 10,000 crores.
- Stringent regulations and transparent trading systems will help in attracting new Investors to this market.
The Retail investors rather then the foreign investors will now lead the current rally. This belief is further reinforced by the constant flow of money into the mutual fund schemes of the various fund houses
Note: The numbers are broad approximations of the RBI released data.
|
|
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
|
|
IP Logged |
|
|
|
vip1
Senior Member
Joined: 09/Oct/2006
Location: India
Online Status: Offline
Posts: 492
|
Posted: 05/Jun/2007 at 8:20pm |
ICICI is bringing out a SIP with monthly instalments as low as 50/ 100 Rs. Imagine the Target customer - each and every Indian .
|
|
IP Logged |
|
|
|
kulman
Senior Member
Joined: 02/Sep/2006
Location: India
Online Status: Offline
Posts: 9319
|
Posted: 05/Jun/2007 at 9:18pm |
After reading all the above arguments, one gets convinced that: "what we've seen so far is just a trailer.....wait for the main movie"
P.S.: 1. That doesn't mean Sensex will double in next 3 months.
2. It can't be the basis of investment logic. Investor has to judiciously put his money by understanding what he is doing.
3. It will be a bumpy ride as we all know.
|
|
Life can only be understood backwards—but it must be lived forwards
|
|
IP Logged |
|
|
|
basant
Admin Group
Joined: 01/Jan/2006
Location: India
Online Status: Offline
Posts: 18403
|
Posted: 05/Jun/2007 at 9:31pm |
Now if this money is channelled into equity markets the businesses that would gain the most could be:
a) Business channels
b) Brokerages
c) AMC's
d) TAU subscription letters
e) TheEquityDesk.com 
Any more ideas?
|
|
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
|
|
IP Logged |
|
|
|
kulman
Senior Member
Joined: 02/Sep/2006
Location: India
Online Status: Offline
Posts: 9319
|
Posted: 05/Jun/2007 at 9:46pm |
Pharma companies................making depressants!
|
|
Life can only be understood backwards—but it must be lived forwards
|
|
IP Logged |
|
|
|
deveshkayal
Senior Member
Joined: 04/Sep/2006
Online Status: Offline
Posts: 3903
|
Posted: 05/Jun/2007 at 9:49pm |
a) Business channels
b) Brokerages
c) AMC's
--------------------------------------------------------------------------
Rel Cap would gain!!!!
|
|
"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett
|
|
IP Logged |
|
|
|
Active Topics
Memberlist
Calendar
Search
Help
Register
Login
