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Indian's Sensex Challenges Pre Crash Levels while Indian small caps and mid caps maintain considerable distance from peak

|Includes:EPI, ICN, INDL, INDY, INDZ, iPath MSCI India Index ETN (INP), INR, INXX, PIN, SCIF, SCIN

Since the beginning of September, Indian Markets have rocketed and currently are at Pre crash levels. India's Benchmark sensex closed on Monday at 20,117. The highest pre crash daily close was on January 8th 2008 at 20873. So we are not too far from the ultimate closing high on the sensex. The market pulled in last week and has received support at 19771 so an attempt to take on the 21000 level cannot be written off.

Curiously, the small cap and mid cap indices have not taken out their pre crash levels and remain at a considerable distance from their all time tops in 2008. 

The mid cap index is currently 8142 at while its all time high closing was at 10102 on 7th January 2007. The mid cap index is still about 19% from its all time high.

The small cap index is currently at 10280 while its all time high closing was at 13975 on 7th January 2007. The mid cap index is still about 26% from its all time high.

One explanation could be that the current advance in the Indian markets is being heavily subscribed to by Foreign Institutional Investors who traditionally demand exposure only to blue chips and are not embracing the risk trade right now.

Since the beginning of the year, Foreign Institutional Investors have been net buyers of Indian stocks seeing inflows to the tune of $8.75 billion, with $4.39 billion coming in September 2010 alone. While Domestic Institutional Investors have had a net outflow of investment to the tune of $2.14 billion in September alone. Similarly Indian retail investors have had a net outflow to the tune of $2.13 billion since the beginning of the year. 

So the question is what are the Domestic Institutional Investor and retail Investor in India missing that the Foreign Institutional Investors are seeing or are the Foreign Institutional Investors missing something.

 

 



Disclosure: "No positions"

Disclosure: "No Positions"

Disclosure: "No positions"
Stocks: INP, EPI, PIN, INDY, SCIN, SCIF, INR, INDZ, INDL, INXX, ICN