Friday, June 20, 2008

NSE: NOT LOGICAL ANYMORE

After observing the NSE trends lately, I am baffled by it's unpredictability. I expected the massive refunds from the Safaricom IPO to cause a mini bull run with the investors putting back at least some of the refunds back into the market and hence boasting the Index to rise. But strangely, the index was rising when everybody else in the economy experienced a liquidity crunch due to the the amounts held up by the IPO. I measured a rise of 0.43%, 1.89% and 6.81% in the NSE index over preceding weeks in the 21st, 22nd and 23rd week respectively, a time when the crunch was at it's worst. Refunds started getting back to investors on June 9th and while I admit that there has been a lot of issues around this matter with many complaining of delays, at least some people, I included received these refunds on time but I measured a drop in the NSE Index with drops of -0.91% and -1.19% in the 24th and 25th weeks closing today.

Just why is NSE behaving this way? Could everybody be trying to chase the Mirage which is Safaricom and if that is the case why are we not seeing a huge leap on the value of this share? Could Safaricom have disillusioned many such that the amounts being ploughed back are minimal? Time will tell