Good report Sir
http://www.moneycontrol.com/india/news/market-outlook/small-retail-in...
Small Retail Investors: Scapegoats Again
*
"Wall Street is always the same: only the pockets change."
**
- Jesse Livermore*
*By Haresh Soneji, CNBC-TV18*
Another quarter is over. And in the midst of earnings season, a clear trend
is emerging. No we are not talking about the dismal reviews. This column
will cover it at the end of the earnings season. The trend is the changing
ownership structure. From the first set of numbers, it is evident that smart
monies continue to desert India Inc. The figures below are adjusted for
buy-backs, FCCB and warrant conversions. It's disappointing. Small retail
investors continue to buy the decline quarter on quarter. (Read here: *Small
Retail Investors: The
Scapegoats*<http://www.moneycontrol.com/india/news/market-outlook/small-retail-in...>
)
The Sensex and Nity ownership pattern includes changes in Reliance ownership
on account of warrant conversion by promoters. So, Reliance promoter stake
moved up by 4% odd. The number of equity shares of Reliance adds up to
nearly 7% of the total shares of Sensex companies. This implies that other
promoters in Sensex companies have actually sold stake.
*Sensex & Nifty Ownership in %*
**
* *
* *
*27 cos*
*Dec 08*
*Sep 08*
*Jun 08*
*Mar 08*
Promoters
58.9
59.73
60.07
60.93
MFs
2.88
2.74
2.67
3.22
Financial Inst
1.72
1.25
1.44
0.95
Insurance Cos
5.92
5.73
5.25
5.32
FIIs
13.52
14.02
14.37
14.46
Small Retail Investors
5.89
5.72
5.7
5.35
HNIs
0.82
0.9
0.95
0.95
**
**
**
**
**
**
**
**
**
**
** *Source: CNBC TV18 Analysis, CMIE*
*Overall Ownership in %*
**
* *
* *
* *
*1030 cos*
*Dec 08*
*Sep 08*
*Jun 08*
*Mar 08*
Promoters
54.43
54.73
54.73
54.88
MFs
3.44
3.44
3.54
3.66
Financial Inst
1.51
1.38
1.45
1.32
Insurance Cos
3.58
3.35
3.25
3.23
FIIs
10.17
10.56
10.95
11.32
Small Retail Investors
11.38
11.25
11.07
10.85
HNIs
3.49
3.48
3.38
3.37
**
**
**
**
**
**
**
**
**
**
** *Source: CNBC TV18 Analysis, CMIE*
**
Consider this small example. Post the Satyam fiasco, FIIs continue to exit
the counter big time. Even MFs and other investors have exited
significantly. However, small retail investors continue to buy the counter.
Several investors' groups, where I am a member of or have been forwarded by
friends, seem to have chains on value buying on Satyam. It's preposterous to
even think of value in Satyam. Several realms of print and numerous hours of
TV footage have been spent explaining the developments on the Satyam saga.
But, small retail investors get lured by traders and/or broker advice. Don't
fall prey to unsound advice. It's your hard earned money. Don't let it run
lose. Remember, the IT dotcom bust. Several IT stocks crashed 95% plus. And
yet found no value in the 2003-2008 Bull Run.
So, are small investors averaging? The number of shares per small retail
shareholders provides some clues here. This seems to be on the rise
substantially. Therefore the answer to the question whether small retail
investors are averaging seems to be partially in the positive. Why
partially? The reason is several new small retail investors might have also
ventured to buy the stock which they could not afford a few quarters back.
But small retail investors forget the basic rule of averaging. You average
on the up tick, not when the stock is on its way down.
The other concern is that small retail investors hold larger share of the
small and mid cap counters. This again is a flaw in investing. Whenever the
new Bull Run will finally start in the Indian equity market, the first round
of fresh buying will be in the large caps. It is common sense. Do not lap up
these small and mid cap companies. Stick to large cap blue chip companies,
if you wish. In times, when flight to safety is the call for the day, it's
frivolous to plough your hard earned money into risky assets. You never know
when the next company will announce that its book was 'cooked up' through
creative accounting.
Times are tough. Small retail investors must protect their hard earned cash.
No one is clear which way the market will go and for how long. So do not
stick your neck out and invest all your hard earned money at one go. If you
can't stop yourself from investing, at least make the investments in bits
and pieces. You will get lots of opportunities.
To sum up in Jesse Livermore words, *"When the market goes against you, you
hope that every day will be the last day - and you lose more than you should
had you not listened to hope. And when the market goes your way, you become
fearful that the next day will take away your profit and you get out – too
soon."* For small retail investors patience is the key to the game now.
*Disclosure: The author is not permitted to trade and/or invest into the
equity market directly or indirectly, apart from investing (long only) in
mutual fund products. His equity exposure is only to the extent of ESOPs
granted by the employer.*
Good Day
--
Regards,
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Allies Financial Services
Website : http://alliesfin.blogspot.com
Email Group : http://groups.google.com/group/alliesfin
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