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Investors hit a dead end

Mumbai, April 10: It was a topple-game of a different kind! And, as yesterday’s heroes turned villains today, a desperate market looked for new winners.

As the markets take a fresh look at infotech shares — the darlings till Infosys lobbed the bombshell this morning — investors woke up to the harsh reality that software was only as good as any commodity worth its salt on bourses.

Infotech companies have pruned earnings growth forecast for the current financial year as a series of events sour scorecards and the zest for business.

The September 11 cataclysm, the war in Afghanistan and the Iraq showdown and, topping it all, the stalling US economy has sapped confidence across the globe.

Indian equity markets were a bit insulated from all this. But this is no longer true as tech stocks wilt under the heat of thinning margins and overseas clients haggling in an effort to get the best deal for themselves.

What can a fund or, better still, an investor do during these times. “Give me your money, and I will put it in tech stocks quoting at attractive prices,” a fund manager affiliated to India's largest mutual fund said.

But where’s the money' Hit by a series of scams, the downturn in world economy and softening interest rates, the retail investors are groping for an alternative. A foreign fund manager said he would put his money in pharmaceutical companies with strong exports, banking stocks at attractive levels and a few auto shares.

For now though, the slide on exchanges is expected to continue. “The markets will open on Friday with an overhang,” said Ramesh Damani, a prominent BSE broker. He refused to speculate on how things will play out after the heat and dust over Infosys has settled.

“It will be company-specific as investors and operators concentrate on the results pouring out. They will judge the performance and the profit guidance offered. The Infy show has not done any good to the market sentiment, which is already at a low,” said Damani.

So, where will the spark come from' Clutching at straws, an analyst said it could come from the banking sector or from a new disinvestment story. But in an election year, it is unlikely that the government will take bold decisions.

“I wish I had an idea,” remarked a fund manager. But there are others who feel that the resilient market will wade through the troubled waters without much ado.

“I have seen this before,” said a manager tracking petro stocks. In September 2002, the petroleum stocks melted after the Cabinet Committee on Disinvestment met. The losses were almost the same as PSU refinery stocks melted by more than 20 per cent. These stocks have come a long way since then.

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