Thursday, December 07, 2006

‘Index play’

It is not just the vast majority of retail investors that are unimpressed by the toppling of benchmark equity indices frequently over the last six months.

The profit for the day traders is decreasing with the upward move of the SENSEX. The stock market is in upward move due to some frontline shares. The upward move is not reflected in all the stocks. Again there is high volatility in the market. In such a scenario it is difficult for the day traders to predict the market.

Though it is not possible to prove all these movements in the stock market is due to few individual foreign and domestic investors. They are repeatedly churning their portfolio by buying those stocks which have very few sellers. If suppose there are two stocks A & B. If investors are selling their stock of A these investors are buying the stocks of B so that the fall in price of A is neutralized by the gain in B. So as a whole the portfolio is not loosing instead it is gaining.

So the retail investors and the fundamental investors are unhappy with such movement of the stock market. It has become difficult to know the right time for the investment in their chosen stock. On Wednesday and Monday the Reliance Communication stock help the index to maintain its position. The favorite stocks for the so called controller of the index are Wipro, Suzlon and State Bank of India.

Source: Economic Times

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