Mkt sentiment looking good today

It has been an amazing month. We feel surprised when we look back at the last week of June, because at that time every analyst predicted that the huge amount of paper would put a lot of pressure on the secondary market. For July, the figure is a staggering Rs 15,000 crore, or USD 3.5 billion, of FII money, which has come into the cash market alone.

The whole hypothesis of the primary market choking of the secondary market has not worked at all. The primary market has got a lot of money and the secondary market has got even more money this month.

We need to go back to our history books and see whether in July of the previous years we have sucked in USD 3.5 billion. At that run rate, we could be topping USD 5 billion a month. We would be hard pressed to find a single month where India has received USD 5 billion. For the whole of last year, we got about USD 10 billion. This is really big money which is coming in and that explains a lot of things globally and in India as well.

You do not want to talk about liquidity as an excuse, which a lot of people do. The markets should be going down but are going up because of liquidity. The liquidity parameter is absolutely intrinsic to the market. Bull markets never happened without liquidity. It is also important to constantly monitor what is happening in the emerging market space.

The feeling is that interest rates are going away and may be the Reserve Bank's Governor will say something positive in this Credit Policy.

Occasionally, you are getting those jerks because it is getting overheated from time to time. There is nothing there to stop the momentum of this market. F&O positions have reached Rs 89,000-90,000 crore, but that does not seem to be mattering at all.

Even if the market has to dip periodically, because it is getting too euphoric now, it will probably show you higher levels before the party stops altogether.