Match fixing & spot fixing is popular word & known fact in cricket world today. Similar to this it seems that Indian stock market movement & stock specific ups and down are decided / fixed by FII today. FII – Foreign Institutional Investor are king for our stock market. If retail investor movement is along with FII they will be happy & if retail investor movement is against FII they will become miserable for sure.
Black magic of FII on our share market is such that What FII does? What are their views? What are their beliefs? Money is coming from where? How much money is invested by FII and removed by FII from stock market? Each and every minute detail is closely track and published by our media time to time.
In daily news headline we hear about FII sell and purchase. If FII is selling stocks Indian market goes down and If FII is purchasing stocks Indian market goes up. It seems FII is acting as stock market fixer.
Ultimately as Indian our mentality & behavior for stock market are dependent on FII. Although FII comprises of only 20% of market capitalization still they shows their importance. Apart from local economic indicator FII consider global growth and US and Japan data for investment. As FII investment are done in foreign currency, exchange rate of currency also important for stock market. These exchange rates decide return on investment for FII investor and that matters a lot for FII inflows. So actually FII inflows are correlated with exchange rate.
Apart from exchange rate some local policy change also affects FII inflows. If government is likely to introduce policy against FII we can immediately see effect on FII inflows. GAAR is recent example where FII has shown negative sentiment and market has acted in reverse manner.
Not only FII several group of brokers also operate and manipulate market. This group of broker are usually responsible for stock specific ups and down. Every morning the big brokerage firms push out to their clients a few companies stocks that they have upgraded, downgraded or changed their price target. Many times this price predictions are correct and market exactly operates like this.
This clearly shows that cricket match of stock market and stocks are fixed by FII and some brokers. Some bookies & investor who closely observe movement of FII can take advantage of this match but majority of retail investor fail to take advantage.