Recession fear triggers equity, crypto rout; FIIs dump India


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By S Jha

New Delhi, June 18: American traders prayed last night that the equity meltdown should bottom out.

Falling knives only hurt more. Yet, opportunities of lifetime are found in such equity crash, argued the traders.

The crypto-currencies are in the midst of bloodbath. Values of Bitcoins, Ethereum, and their peers have eroded to record lows.

In India, the foreign institutional investors are dumping their investments on a daily basis, pushing both the stock market indexes down.

On Friday, the FIIs net sold equities worth Rs 7,818.61 crores. In the month of June, the FIIs have remained net sellers. There wasn’t a single day in June when the FIIs had a net buy in the Indian equity market.

In fact, the FIIs have been dumping their investments in India since April, 2021. September, 2021 was the only exception for the FIIs when they actually bought in the Indian equity market.

From April, 2021, the FIIs apparently became aware that the Indian growth story didn’t supported the heated equity valuation, which had already been pumped to the record high as the almost zero interest rate in the US and Europe sent billions of US dollars in search of short-term investments in the emerging economies.

In June, the FIIs have net sold Indian equities worth Rs 42,088 crores. Last month, the FIIs dumped Indian equity the most, selling equities worth Rs 54,292.47 crores, which till date remains the highest.

This year, the FIIs have dumped Indian equities worth Rs 2.67 lakh crore.

The domestic institutional investors led by the Life Insurance Corporation of India and others have sought to step up their investment, but are way below the ferocity by which the FIIs are dumping the Indian equity market.

The legendary Indian equity market trader Shankar Shama, also known as a bear, claimed that the stock market meltdown is one in a 10-year opportunity for the investors to board the equity space.

Indeed, the global equity market in March, 2020 too had reached the bottom pit, from where they sharply jumped to go to the historical record high levels, giving the risk-averse investors multiple returns.

“S&P 500 down more than 12 per cent in 10 days, three gaps (downs) and a deeply oversold condition. If the market can’t put together a rally after that, it’s telling you ‘I’m very weak’,” tweeted the legendary American trader Mark Minervini.

He further sought to bring his perspective, saying “personally, with what I’ve experienced and witnessed over 40 years of trading (including the crash of ‘87), if the market cannot rally from a deeply oversold condition and we have a bad close today, I would not want to be long over the weekend. Let’s see how we close today,” added Minervini last night.

The US market closed green in line with Minervini’s assessment.


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