One of the things you learn again and again. Investing is about many things. Fundamentals, technicals, quant, models, everything. But it breaks on one thing: Liquidity.
When you have ample liquidity you care about stuff like fundamentals and balance sheets and stuff like that. Because there are enough buyers and sellers. But behind the scenes, the liquidity equation is working for you.
When too many people buy a share and keep it for the long term, it reduces the number of shares available to "trade". That can be used to move the share in the direction you need it to go. Fund managers have excelled at this, forever.
Many promoters too know this. The more shares stuck with institutions that won't sell (like LIC) the better. The share then needs very little money to be controlled properly, or to basically destroy anyone that goes short.
But this is a double edged sword. If people do stupid things like pledge their shares, or ask operators to take positions to reduce liquidity, they open themselves to damage when suddenly someone has to sell shares. Then, you get supply where there was none.
A rogue operator will dump shares. A PMS manager who bought it for all his clients will suddenly ditch you. An institution will have to sell because you got downgraded. All this beats up the stock price, because the supply suddenly exceeded demand.
What you've seen in the market so far, is liquidity rearing its ugly head. There is never a 40% fall on fundamentals. There is one in a fire sale. In a fire sale, everything must go. Best bank in the world, go eat a biscuit, but gimme money for my shares.
And therefore, it is the return of liquidity that drives up the value of a stock. I won't elaborate here - this is twitter and by now I'm part of 175 conspiracy theories - but when markets don't make sense, look primarily at liquidity. Who's selling and why. And now, who's buying
The answer, in a more detailed way, in a story coming soon to a certain web site near you.
