Global running of the bulls?

If you thought that the Indian Sensex was the only stock index that hit a historic high this past week you’d be wrong. The Running of the Bulls festival has just ended in Pamplona, Spain. However, the bull markets continue to run up in every other country, some of them include: US Dow Jones, US S&P 500, Australia, South Korea, Honk Kong, Singapore and Germany.

The story has been played out all over the media here in India, with a very India centric story. The talk of how the Foreign Institutional Investor’s (FII) are just pouring money into India and what a great growth story it is, with a subtle hint that if you don’t invest in the markets you are an idiot.

FII’s have poured about USD 3.5 billion in the last two weeks, compared to USD 4.37 billion from January to June. However, you ask any trader on a trading desk and they’ll tell you the same thing – very thin liquidity. Most funds that come to India, end up trading one instrument – the nifty index future. Which means most funds are essentially day trading or short term traders, not the much touted long term growth strategy play. In this market the FII’s are the bulls, if you plan to run with the bulls just make sure you don’t get gored.