Thursday, August 13, 2009

Is Indian stock market immature?

Is Indian stock market act immature? This is the most lingering question i have. Our market lacks depth - that is for sure.

But immature? you might question....

i will explain this with two examples now...

1. Hindustan UniLever Q1FY10 schduled on July 28th. The stock prices was hovering around Rs.300 up from Rs.250 before 30-45days. CNBC's earnings estimate was 615 crore (10% up) and the earnings announced was Rs.543 crore vs Rs.558 crore.

Stock crashed from 303 to 270 in flat 20minutes. Lever was one of the heavy weights and this violent behaviour was unwelcome for a index stock.

2. Sesa Goa couple of days ago was trading at 250 levels. Government wanted to impose 10% royalty on iron ore mining activity - the news got flashed in cnbc. Sesa Goa plummeted to Rs.225 in the next 30min.

It is common for governments to levy royalty to mining companies world over. Is our analysts or traders not aware of this?

Both these recent cases confirm that indian stock markets lack depth, maturity and they simply over react with some herd mentality behaviour and our market participants lack contrarian view.


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