Thursday, 30 October 2008

Do retail investors indulge in cherry picking?

October Data

Retail investors bought equities for Rs 1,843.69 cr

FIIs have sold equities for Rs 16,890 crore

Though the highly volatile markets scare the retail investors away, they do seem to be picking up shares at low levels.

Retail investors have been net buyers of equity for Rs 1,843.69 crore so far this month, according to the data from the BSE. In Tuesday’s Muhurat trading too, they were net buyers by Rs 8.25 crore.


Despite the markets tanking on Friday and Monday, retail investors have been buying. On Monday, they were net buyers for Rs 55.29 crore and on Friday by Rs 330.77 crore.

In Muhurat trading, considered an auspicious time to buy, individual investors made a token purchase. But this cannot be construed as a trend, said an analyst.

For those who can afford to stay invested for two to three years, sources said, some shares are now trading at attractive level.

‘Buy large-cap’

A senior equity advisor with a stock broking firm said that he is advising clients to invest in select large caps rather than putting it in mid- and small-cap stocks. When the markets start their upward journey, the large caps will gain more than the mid- and small-cap stocks. Large-caps are far more liquid than the smaller stocks.

The domestic institutions have also been net buyers so far this month for Rs 10,912.43 crore. In the last three trading sessions, they bought equities worth Rs 1,455.22 crore.

Speaking to Business Line, Mr C.J. George, Managing Director of Geojit Financial Services, said retail investors are seen buying in small quantities. Unlike in the past market meltdowns, retail investors are not that panicky.

FII dumping continues

They realise that the market fell as foreign institutional investors started dumping stocks to meet their needs back home.

FIIs, who have been in a savage selling spree for quite sometime now, sold a net Rs 69 crore even in the one-hour Muhurat trading on Tuesday.

So far this month, FIIs have been net sellers for Rs 16,890 crore, bringing their total net sales to $12.65 billion this year.

Source: TheHinduBusinessLine

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DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. The author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and that you confirm the facts on your own before making important investment commitments.