As I had expected FIIs came from nowhere pulling money massively everyday from Jun 1st week the last day of this quarter. Many foreign investment firms have massive losses to write down in the quarters to come. They improve their balance sheets by booking profits wherever possible in the same period as they are booking losses. Both US and European institutions are suffering from this crisis.
It is very crucial to watch the action of FIIs in the days ahead. They can continue their frenzy to sell for variegated reasons. But if they subdue their selling, a rebound can be expected. Nobody likes to buy top support the repeatedly falling market. One time it is possible but not second time. Though the real bulls are Indian bulls, we have to wait till their action can have effect. That is good news for us.
The worst sector to concentrate now is the IT or outsourcing sector. Even export oriented sectors. The present inflation cannot be mitigated by any means other than appreciating rupee against falling dollar. Both this and the rise of interest rates will affect the IT companies. IT sector is nearing a checkmate after which the housing can start becoming affordable. Unless a massive deterioration happens in these sectors, one cannot expect good times ahead.