After almost getting within striking distance of their all-time highs, the Nifty and Sensex fell vertically over the last 3 trading days of the week. Why exactly did they fall so rapidly and what were the triggers? There are 4 such triggers!
It is all about the ETFs…
Exchange Traded Funds (ETFs) are powerful global passive investors. Passive in the sense, they don’t bother about outperforming stocks, and specific stock performances. They just buy the index if they like a particular market. Since the beginning of March 2015, over 85% of the money that came in was in the form of passive ETF money. Just as the ETF buys all stocks in the index in the ratio, it does the same when selling. These ETFs are typically driven by news and valuations. Not surprisingly, they hit the 2 high/PE sectors viz. Pharma and Technology. To combine with rich valuations there was cross currency risk. Continue reading
