Impact of liquidity in stock markets
Tags :
Liquidity,impact of liquidity,investment,stock markets,lehmann brothers,financial market,
Industry :
Equity Research/Analytics
Functional Area : India |
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About "Impact of liquidity in stock markets" topic:
Back in 2006 and 2007 when all the recession had started, global financial markets were flushed with liquidity, many investors were caught badly burned as the global financial markets collapsed in the wake of the collapse of Lehman Brothers, followed by the massive loss of liquidity. So let us share our knowledge on the Impact of liquidity in stock markets, both positive and negative aspects of it.
1 insight
, 3 debates
, 2 idea contests
on topic: "Impact of liquidity in stock markets"
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Let there be no doubt that the ongoing rally in India is driven in a massive way by a surge of inflows from Foreign Institutional Investors (FIIs). Participation by mutual funds and insurance companies has paled in comparison. As a result, this market has been beneficial for speculators, traders and high-risk taking retail investors.This pattern is no different from what we have witnessed in the past in India. FII flows have recovered by about $ 10 billion from the lows of 2009. They had been net sellers of Indian equities to the extent of about $ 2.5 billion by mid- March,taking equities to a low for the year.Inflows from FIIs since then has been on an upward trend and is approaching $ 9.5...
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Narayan Seetharaman Thathai
| Commented
| 2 years ago
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Agree fully with the article. The recent drive in asset prices could see a reverse turn on liquidity dry up, tightening of intt rates on the back drop of increase in inflation. For India, the inflation could spiral especially in the back drop of a...
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Padmanabhan R
| Commented
| 2 years ago
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Nice work sir thanks for sharing , yes extra liquidity can heat up discrepancies in valuation to alarming levels if goes unchecked and later correction will dry up liquidity to grave levels. Easy credit and good return will attract speculators.
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suchita Ambardekar
| Commented
| 2 years ago
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Wonderful article ...and a very keen observation.....Vaidya, This means the that whole of this century we will be facing one bubble after another.This also means that in principally, the flow of the money into an asset class will give rise to a...
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Insight: "Play the liquidity-driven rally with care" deleted from your view.
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1
Liquidity drys when market becomes one-sided or no market is available.
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There are all kinds of liquidity in an economy
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Mathew Cherian
| Added idea
"There are all kinds of liquidity in an economy"
| 2 years ago
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There are all kinds of liquidity in an economy required to keep it going like US. There is for instance 1)Market liquidity which probably we are aware of and there is 2)financial liquidity where by the institution provide liquidity where...
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Padmanabhan R
| Supported idea
"Liquidity drys when market becomes one-sided or no market is available."
| 2 years ago
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Well said sir, it occurs when there is huge selling pressure or risk aversion. Also I think excess liquidity in market favours risk taking, like heavy leveraging and this when unchecked results in liquidity drying up to grave levels later during...
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Mathew Cherian
| Supported idea
"Liquidity drys when market becomes one-sided or no market is available."
| 2 years ago
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When Invstors are less "Risk Averse" the market become more liquid. This is an idea propounded by Von-Nuemann-Morgenstien "which states if one preferrs an investment with 70% chance of dobling ones investment or 100% return of your original...
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Ideate: "Why does liquidity in financial markets dry up?" deleted from your view.
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(rate this)
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Yes
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11
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0
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No
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Dushyant Hada
| Argues in support of
"Yes"
| 3 years ago
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Liquidity is very important for investor, and its only enable a investor to safeguards from market vulnerability.
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Mathew Cherian
| Argues in support of
"Yes"
| 3 years ago
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Liquidity is the most important factor in Stock trading. If the Stock Market need to function efficiently there must be adequate liquidity. In NYSE they have the specialists, the broker dealer, the pool operator and the curb trader all of whom...
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Debate: "Market Liquidity Matters:Is liquidity is good for investors in current scenario? " deleted from your view.
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(rate this)
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1
opportunity in crisis
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Increase liquidity
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Ankit Gandhi
| Supported idea
"opportunity in crisis"
| 2 years ago
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yes, I Totally agree with Mr.Sandesh Saboo it's a good attitude to seen that whatever difficulties we have taken in the very positive mannaer. So, In contex of liquidity crisis according to you lots of opportunities are there if corporates and...
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sandesh saboo
| Added idea
"opportunity in crisis"
| 2 years ago
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this is a opportunity for those who are having excess funds. a)business buy outs b) those running business need to be told to have enough funds to tackle slow downs,fall in sales.say having six months expenses tied up. or having a reserve which...
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Ideate: "How liquidity crisis can be tackled?" deleted from your view.
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(rate this)
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Liquidity may be measured based on cashflow analysis.
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9
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2
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Liquidity may be measured based on ratio analysis.
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MAJETY CHANDRA SHEKHAR
| Argues in support of
"Liquidity may be measured based on cashflow analysis."
| 2 years ago
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A bank is responsible for the sound management of liquidity risk. A bank should establish a robust liquidity risk management framework that ensures it maintains sufficient liquidity, including a cushion of unencumbered, high quality liquid...
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rajendra borikar
| Argues in support of
"Liquidity may be measured based on ratio analysis."
| 2 years ago
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As rightly opined by k s i fully agree that liquidity must always be judged by studying the changes in well defined rations and not by quamtum of cash flow. This is also as per widely accepted international accounting standard. so pl.
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Sanjay Thakur
| Argues in support of
"Liquidity may be measured based on cashflow analysis."
| 2 years ago
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Ratio Analysis is, no doubt, a useful tool. However, cash flow analysis help understand real quantum of cash/cash equivalent available than a relative figure supplied by a ratio. Secondly, and most importantly, bank focuses more on management of...
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Debate: "How to define and measure Liquidity,liquidity risk tolerance and cushion value for a bank?" deleted from your view.
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(rate this)
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Bad
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1
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0
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Good
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Idhris Mubeen
| Argues in support of
"Bad"
| 1 year ago
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This could lead to a purchasing of outdated euipments, outdated technology
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Debate: "Obama's visit will have good impact or bad impact in India?" deleted from your view.
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