The Indian FAO series closed out amidst lots of groans and desi shakedowns including yours truly as the fundamental nature of arbitrage linked opportunity creates a dynamic investor landscape. While metros have stopped growing their pie for equities, the recent SEBI bulletins highlighted by ET indicate equities may be finding favor in new pockets now.

Cities like Kochi, Rajkot, Hyderabad and Pune accounted for 5.4% of the total cash turnover of the National Stock Exchange (NSE) in June this year compared to 4.9% in ’09-10 and 4% in ’08-09, according to city-wise data on the cash market turnover published in Sebi’s bulletin for July ’10. Many other smaller cities, which are categorised as ‘others’ in the data, recorded an improvement in their share to 8.1% from 7.4% and 5.7%, respectively. 

Unlike the trend in tier-II and III cities, the four metros have not seen much improvement in their share even though the stock exchanges recorded a sharp rise in securities turnover during the period. While Mumbai continues to dominate the broader picture with the share of 56.2% in June compared to 55.9% in 2008-09, the other three — Delhi, Kolkata and Chennai — saw their contribution decline substantially to 12.2%, 7.3% and 1.7%, respectively, from 15%, 9.2% and 2%. They recorded a fall despite a sharp rise in NSE’s turnover from Rs 27.5 lakh crore in ‘08-09 to Rs 41.2 lakh crore in ‘09-10. The figure amounted to Rs 11.3-lakh crore in April-July this year. 

What August underlined was the growing disaffection amongst investors with the 9000 strong investor club that seems to manage all price points on the Indian exchanges. Well, having had an eventful month ourselves with 25 days of gains marred by one last week of gainsaying and abject failure we have much to say on the indian price discovery mechanism. 

My secrets are thus: DIIs are the most inconsequential class of investors and have already exited these markets almost completely having counted their gains from the Day 1 post crisis in June/July 2009 or even in Jan-March 2009 when the markets spiralled to the bottom. The FIIs on the other hand are fresh and hungry still for investment plays and so is LIC amongst others who have a fat chequebook. But while I have no objections with the broker club on the bourses as I have said quite a few trend making notes and they have borne fruit, I find that the way lack of interest and weakness during the 7 days to expiry in F&O was used by a dozen bears to drive down the 5500 series of the Nifty totally OTM and wasted a real derogatory comment on the maturity of the Indian bourses. Stocks had fundamentally discovered 5580 as the new level and just because of a phantom of expiry, the index lost momentum and nearly changed direction. These unfortunate occurences will never be seen as coincidences as players might wish them to be and neither are these event any basis or triggers for the sell down witnessed,. It has still dented the principles of fair play and is unlikely to stand good for one of the largest public markets in the world. 

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