Federated Investors Inc: Selling Is A Key Factor

The markets closed down almost 2 pc for the week and a notable fact was that the Federated Investors Inc (NYSE:FII) turned sellers for almost every day of the week. Also, on Friday India received a ratings upgrade. Let us see the future course of the markets.

1. FIIs selling is a key factor. They are 1 of the most vital components that keep the markets. Typically, the Indian markets are dependent on FII money, Domestic funds out of which LIC is a key component and the Retail and the HNI component of the market. The Domestic funds are mostly a defensive option as such they buy when FIIs sell, and markets bottoms can be identified when Domestic funds are net buyers for a couple of weeks to a month. The FIIs are the steroids on which the markets go up. the Retail and the HNIs are bit players in this whole game.

2. Now, with huge issues of divestment coming up, LIC will divert money out there and so will those FIIs betting on the long-term India story.

3. The markets are likely to consolidate in the next few weeks and months. the long-term picture remains intact. This would be a good opportunity to accumulate quality stocks rather than selling stocks at lower levels.

4. The markets closed at 7968 after testing 7841. The markets have already corrected about 4 pc from the top. It could happen that the markets test 7400 also.

5. Globally, usually the markets tend to be slow around this time of the year. It could happen that we correct now and set the stage for November to February rally.

6. The next 3 weeks also will see the Maharashtra elections happening. BJP has lost the edge in the elections and I see it extremely rare to see a BJP CM at the helm after the elections. It could still happen that there is a BJP CM but with a tie-up with NCP.

Now, is neither the time to buy or sell but to wait and watch. Buy around 7400-7500 or sell between 8200-8500.