Market watch | In silent anticipation

This week has been a curious one. After all the volatility of the last fortnight, the market has gone completely limp, reports Udayan Mukherjee.

This week has been a curious one. After all the volatility of the last fortnight, the market has gone completely limp. Total traded quantity in the last couple of days, both exchanges put together, have been around 40,000 crores, 30 per cent lower than the previous averages. This, more than any price movement, is reflective of the lack of conviction on the street today.

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It’s almost like a car driving slowly on a road with many bends: The driver is always unsure of what lies beyond the next bend and whether there is another vehicle rushing down the other way.

What is also making investors apprehensive is the prospect of large-scale withdrawal of FII money, if the US problem deepens. So far, we haven’t seen much by way of outflows.

Since July 27, when it all started, FIIs have sold around $1 billion of stock in the cash market. Now, this may seem large but seen in the context of the record inflows we saw in July, this isn’t significant.

Particularly so, because domestic institutional investors bought almost an equivalent amount during the period. This has cushioned the fall to a large extent. Also, India has fared much better on the liquidity front, relatively; Taiwan has seen outflows of $4.5 billion since the correction started.

(The writer is Executive Editor, CNBC-TV 18)