tag:blogger.com,1999:blog-19649274.post2640747799604881449..comments2024-03-29T12:03:50.891+05:30Comments on The Leap Blog: Discussions on 'Mythbusting: Current account deficit edition'Ajay Shahhttp://www.blogger.com/profile/03835842741008200034noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-19649274.post-56591544733030210812010-12-27T15:31:26.955+05:302010-12-27T15:31:26.955+05:30Dear Chirag,
I don't agree with your characte...Dear Chirag,<br /><br />I don't agree with your characterisation.<br /><br />There is a good deal of expertise in market manipulation on the equity market and I have had long discussions with people who know that game. To get a sustained impact on the price, you have to be ready to buy 10% to 20% of the overall turnover every day. Anything less than that is just pointless.<br /><br />E.g. it's incredibly hard to do a market-based manipulation of Nifty given the huge activity on Nifty futures and options. It is also very hard to do this with the top 50 stocks, the members of Nifty, because they are quite active. It is cheaper to manipulate information : hence you see a big focus these days among the bad guys to go after media management (with both lucre and threats).<br /><br />10 trades of 10M each is $100M. Yes, it might generate a small movement, but that small movement will tend to revert back. If you are after a sustained and economically significant shift in the price (e.g. Rs.1 or Rs.2) then this will just not do it.Ajay Shahhttps://www.blogger.com/profile/03835842741008200034noreply@blogger.comtag:blogger.com,1999:blog-19649274.post-55245192281710488752010-12-25T19:07:54.968+05:302010-12-25T19:07:54.968+05:30Dear Ajay,
While I agree that 40 bn a day is a re...Dear Ajay,<br /><br />While I agree that 40 bn a day is a respectable number for INR trades, the number in itself is not so large to leave RBI as helpless as you made it out to be. <br /><br />RBI needs to only hit 2 big dealers (say CITI and SBI) with 10 trades of 10 mn a piece in rapid successions when it sees low volumes and the price impact is huge and then the volume charters in the market will do wonders.Chirag Shahhttps://www.blogger.com/profile/17422369873432545970noreply@blogger.com