It’s strange how things turn upside down in matter of few days and weeks
FIIs are pumping in money in stock market as if there is no tomorrow; and prices on the screen are moving in a irrational fashion. Charts look completely dislocated with huge gaps in the chart.
Analyzing the current market with rationality is the most irrational thing one can do. You have to accept something big has happened and Indian market is undergoing a pretty dramatic change.
India needs capital for growth and India Inc has always been hungry for capital. But in 2008, the global events made funds not only expensive but unavailable. Result - The balance sheets started looking horrible and it looked like story over for India Inc. BUT things are changing once again. Liquidity is back…chasing corporate paper left right and center
FII inflows
FIIs have pumped in Rs. 12 900 crores in cash market…just in May alone. DIIs have not been that enthusiastic.
Daily Chart
Starved Indian companies are getting liquidity boost and it’s no surprise that game has changed - find a malnourished capital hungry company and you will make tons of money. PE is no more the yardstick to judge a company. Liquidity is going to overhwhelm all the fundamentals.
Momentum is back and let us see how long it lasts :-)
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