Benchmark indices may be leaping into newer orbits, but cashing in on the rising market is turning out to be tricky — even for some of the seasoned investors — as the market is changing its leaders like a banana republic. The Sensex on Thursday closed at a new high of 15092.04, touching 15,112.22 intra-day, up 181.42 points. Even the NSE Nifty ended at a new high of 4,446.15, up 1.3% or 59 points.
These are impressive numbers. But, day traders and short-term investors, who take two days to a one-month call to play the market, are finding it extremely difficult to make decent money. Every day, it seems to be a different set of stocks that push up the indices. Infosys Technologies, which was one of the major contributors when the market hit a record high in February, has now been underperforming benchmark indices for more than three months. But that has not stopped the onward march of the bulls, who have zeroed in some other stocks.
With the market refusing to acknowledge any negative news — be it a ratings downgrade of a key stock, slowdown in loan demand, or a glut of new shares from IPOs — investors seem better off ignoring fundamentals for the time being.
“Because of the volatility and a limited number of sectors participating in the upswing, only those investors who have been sitting on their investments would have made huge profits. Short-term players would have to be extremely lucky in spotting the trend every time so as to be able to make big money,” “I think only a small section of the market has been able to benefit from the recent rally,” said Motilal Oswal, chairman of the brokerage Motilal Oswal Securities. “Because of the volatility and a limited number of sectors participating in the upswing, only those investors who have been sitting on their investments would have made huge profits. Short-term players would have to be extremely lucky in spotting the trend every time so as to be able to make big money,” he said, adding there were too few long-term investors in the market at the moment.
Mr Oswal is not exactly talking about small investors. A head of derivatives desk at a foreign broking firm recently took short positions in steel futures and went long on cement stock futures, going purely by fundamentals. Cement futures rose, but so did steel futures, thus narrowing his profits.