Fw: FII - Investors Vs Traders ::
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MyCharts
Oct 6, 2012, 12:30:42 PM10/6/12
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----- Original Message -----
From: MyCharts
To: Google Groups
Sent: Saturday, October 06, 2012 9:59 PM
Subject: FII - Investors Vs Traders ::
In Indian Markets, FIIs
contribute around 25% - 40% of the total Cash and F&O segments on a daily
basis, which obviously makes them the leaders and market drivers. This means,
FIIs normally do a turnover somewhere between 25,000 Cr to 40,000 Cr
approximately on a daily basis.
Let us take an example, consider the turnover made by FIIs on Sept 21st, Index Options turnover alone is around 28,000 Cr which is traded out for the same day or for the the next day with yields or hefty returns of about 100% - 300% (a 30-40 Rs premium in Index Options can go up to 100 Rs – 120 Rs in a single day).
Let us workout the profit probability of these trades…
On a daily average turnover of around 15000 to 20,000 Cr Only in Index Options
If we consider 100% return – Profit would be around 20,000 Cr
If we consider 50% return – Profit would be around 10,000 Cr
If we consider 25% return – Profit would be around 5,000 Cr
Considering the fact that FIIs are the leaders, market movers and drivers, even as low as 25% return on Index Options trades will fetch them 5,000 Cr on a daily basis, which is being Sucked and Squeezed out of the Indian system, which is indeed a huge and large portion of Indian economy. Now let us see what is the average daily (Net) investment of FIIs in cash segment, which is somewhere about 500 Cr to 750 Cr or to make it more simple let us say they make daily investment of 1000 Cr in overall Cash segments. This is a very small amount for the profits that they are making on a daily basis as explained above
Another important and interesting fact about them is in the past 1–2 months of trades, they have been buying the Stocks in cash segment and are continuously short in the Stock Futures which is an adapted hedging strategy to make much more bigger profits..
The above turnover statistics data is from NSE Official website and the assumption is based on the data hosted in NSE website. Also the profitability assumption calculations are based on average daily profit a trader does in Index Options. Finally, to conclude, FIIs are not "The Investors" as termed, rather are "Smart Speculative and Big Market Driving Traders".
"Special thanks to Pinal and Murali who has helped a lot in bringing up this article"
Let us take an example, consider the turnover made by FIIs on Sept 21st, Index Options turnover alone is around 28,000 Cr which is traded out for the same day or for the the next day with yields or hefty returns of about 100% - 300% (a 30-40 Rs premium in Index Options can go up to 100 Rs – 120 Rs in a single day).
Let us workout the profit probability of these trades…
On a daily average turnover of around 15000 to 20,000 Cr Only in Index Options
If we consider 100% return – Profit would be around 20,000 Cr
If we consider 50% return – Profit would be around 10,000 Cr
If we consider 25% return – Profit would be around 5,000 Cr
Considering the fact that FIIs are the leaders, market movers and drivers, even as low as 25% return on Index Options trades will fetch them 5,000 Cr on a daily basis, which is being Sucked and Squeezed out of the Indian system, which is indeed a huge and large portion of Indian economy. Now let us see what is the average daily (Net) investment of FIIs in cash segment, which is somewhere about 500 Cr to 750 Cr or to make it more simple let us say they make daily investment of 1000 Cr in overall Cash segments. This is a very small amount for the profits that they are making on a daily basis as explained above
Another important and interesting fact about them is in the past 1–2 months of trades, they have been buying the Stocks in cash segment and are continuously short in the Stock Futures which is an adapted hedging strategy to make much more bigger profits..
The above turnover statistics data is from NSE Official website and the assumption is based on the data hosted in NSE website. Also the profitability assumption calculations are based on average daily profit a trader does in Index Options. Finally, to conclude, FIIs are not "The Investors" as termed, rather are "Smart Speculative and Big Market Driving Traders".
"Special thanks to Pinal and Murali who has helped a lot in bringing up this article"
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