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Sudhanshu Ranade

Non-Sensex stocks lose interest

Chennai March 29 The 12-per cent fall in the Sensex between February 9 and March 28, was accompanied by a shift in the centre of gravity between Sensex stocks and non-Sensex stocks; a relative shift of investor interest towards the former..

Sensex counters saw a turnover of Rs 79,000 crore in January, 41 per cent of the total turnover of Rs 1,90,000 crore in the 500 S&P CNX stocks, in which Sensex stocks, too, are included.

This was below the corresponding figure of 47 per cent registered in 2006.

But in February, the figure rose a notch above the 2006 level, to 48 per cent.

Cumulative turnover in the 30 Sensex stocks in March (up to March 28) was 63 per cent of total CNX 500 turnover. Turnover for the 30 Sensex stocks was Rs 78,000 crore while the turnover for the remaining 470 stocks combined was only Rs 46,000 crore.

When the Sensex tumbled quite steeply on March 7, 15 and 22, turnover in Sensex stocks was double that for other stocks included in CNX 500, two and a half times as much on March 26, and thrice as much on March 28.

The 10-per cent fall in the CNX 500 between February 9 and March 28 was accompanied by a 35-per cent drop in turnover; March turnover was Rs 64,000 crore below January. The Sensex fell 12 per cent. But turnover hardly dropped at all. It was Rs 79,000 crore in January, and Rs 78,000 crore in March.

Why were Sensex stocks able to do brisk business, while turnover in non-Sensex stocks fell so sharply?

According to the logic of demand and supply, it is natural for people to want to buy more now, when prices are falling. But why are people selling? Perhaps the best answer was given by Lord Keynes, the only Nobel Laureate in Economics, ever, to make a fortune on the stock market. He made his money, he said, by studying the track record of investors, not the track record of the stocks they invested in.

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