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8 today, what tomorrow: No one’s afraid of heights

Sept. 8: Point 8000 crumbled today as the sensex ' the stock market’s index ' scaled its second psychological peak in just 55 trading days. On June 20, the sensex had crossed Point 7000 for the first time.

The relentless bull run ' which has given the Indian markets the reputation of dishing out the third highest returns this year among emerging markets ' has been ignited by foreign investors who have funnelled Rs 34,091 crore into the Indian bourses in the first eight months of 2005.

Their enthusiasm is based on the hope that the roller-coaster ride will continue for some more time.

Just a few months ago, when the sensex hovered at 6500, finance minister P. Chidambaram had said he would be worried if it topped 8000. Today, he said there was no real cause for concern but advised retail investors to make informed investment decisions in an increasingly volatile market.

In Calcutta, the head of capital market regulator Sebi, M. Damodaran, said he was not terribly concerned about which way the market was moving ' but indicated some unease about the way a few dormant stocks had displayed an “irrational and unexplained bounce”.

“I have always maintained that as regulators, our job is to look at orderly conduct in the market place and not market levels. Market indices can rise or fall for a variety of reasons. We have to see whether they are rising as a result of orderly conduct in the market place or for some other reason,” Damodaran added.

Both Chidambaram and Damodaran indicated they would step up vigil to ensure market manipulators were not taking advantage of a sustained bull run over the past year to ramp up stock prices.

On Dalal Street, there was euphoria after the sensex closed at 8052.56 points, a gain of 105.78 points. But there was some unease, too, because the market has moved into uncharted territory.

“The market is taking it in its stride,” said Ramesh Damani, a BSE broker. Some had turned a little blas'. “It’s just one more milestone,” said Arun Kejriwal of KRIS, a premier portfolio advisory service. “I am worried as investors will ask, ‘what next'’”

Others like Jagdish Malkani, an NSE broker, were a trifle uneasy. “You cannot stand in the face of a storm,” he said. “Deep down, I am not comfortable.”

The rapid climb to 8000 comes at a time when the economy remains robust with growth projected at 7 per cent, inflation fairly well under control at a tad over 3 per cent and corporates brimming with confidence that they will turn in good results in the second quarter.

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