Nobody knows anything.
Since the memories of the global financial market meltdown of 2008 and 2009 are still fresh in investors’ mind, they are cautious now. Usually, FII fund managers book some profit in their portfolios towards the end of the calendar year, and the same could start now. “They need to take some money home which will pay for their bonuses,’’ said an institutional dealer with a domestic brokerage house.
Market analysts therefore feel that there could be a correction of around 10 % in the stock markets over the next few months. Usually profit taking happens in November-December and FIIs come back to the market after they get their fresh allocations during the second and third week of the new year. This year, however , things could be a little different and they might continue to sell, said Arun Kejriwal, director, KRIS, an investment advisory firm.
“They might decide to sell now because they have made good money in their portfolio . Additionally, the rupee has also appreciated against the US dollar. So if they sell now and take money home, they would benefit on both counts,’’ explained Kejriwal.
So far this year, net FII inflow in stocks is nearly $27 billion. During the same period, while the rupee has appreciated nearly 5% to 44.21 to a dollar now, the sensex is up a little over 20%. Another factor, market players pointed out, that could affect the rupee is the rising crude oil prices . After the US Fed announced its second stimulus package worth $600 billion, sensing higher demand for oil in the US, global crude oil prices have shot up and is trading at $87 per barrel level.