There was heavy FII buying which took stock from 52 week low in June’15 to 52
week high in Aug’15. After failure to get the payment bank license, the stock
collapsed to near 52 week low same month i.e. in Aug’15. In general, the market
favor stocks in which FII buying is evident. This data is available every
quarter when companies declare their shareholding pattern. An increase in
FII holding means FII buying was active during last quarter.
As an investor, this information is of no use as the game may be already over.
Before we proceed, i would like to clarify one of the biggest misconceptions
about FII buying. Though the traders are aware of this fact but still not
known to many. You must have read the news reports or watched on TV channels
that FII bought +300 Crores or FII sold -250 Crores. Normally investor
considers it as a gross no’s but fact of the matter is that these no’s
are net value i.e. Buy value minus Sell value. For example, if today FII’s
bought securities worth Rs 2000 Cr and sold Rs 1600 Cr. In this case, the
FII figure reported in media will be +400 Cr. In short, on net basis FII
buying was Rs 400 Cr which is a positive signal. On the contrary if FII
buying is Rs 2500 Cr and selling at Rs 3000 Cr then FII fig is -500 Cr
i.e. on net basis FII selling was -500 Cr which is a negative signal.
Therefore, point i am trying to make is that if FII reported fig is
negative then it doesn’t mean that FII buying has stopped. On a net basis,
they might be selling which is negative but they are still buying which is
subdued buying.
