India Seeing Quant Tools Emerging

    Quantitative tools are gaining popularity with fund shops in Indian as the market demands improved standards of research, according to Reuters.   Quantitative research has been useful to Sanjay Sinha of SBI mutual fund and a few other analysts who are using the research, as it senses the market undercurrents across sectors and capitalization earlier than other methods might.   “With the markets now becoming fairly deep with over 2,000 stocks traded on any given day, you need to keep an eye on activity throughout the market,” said Sinha.   Keeping the research from being used more widely is high costs and paucity of historical data, experts stated.   “Quantitative analysis takes away the personal bias of the individual,” said Gaurik Shah, associate at Mape Admisi Securities, a brokerage that relies heavily on quantitative research. “[The] quantitative tools we use have given decent returns and our models have outperformed by 20-40% to the broad market,” he said.   Aalap Shah, a derivatives analyst with Dolat Capital Markets, said the firm was able to sense early the oncoming correction in the derivatives market in February. Dolat advises its clients to be cautious after implied volatility on options strayed out of normal trends in December, Shah said.   However, there are challenges to quantitative research as it is in beginning stages in India and the pool of talented researchers is small.   The biggest challenge might be the shortage of data available. The Indian market is very young and it is very difficult to test some of the tools on indexes or stocks, said Gaurik Shah.   The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.