The Telegraph
Since 1st March, 1999
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Five days and 500 down, almost

Mumbai, Jan. 11: The bourses were brimming with brio at the start of the year; a little over a week later the markets have tottered, leaving retail investors a little ragged and uncertain about how their stock portfolios will play out in the run-up to the budget next month.

Those who claim to know better still insist that it is a bull market. But after the gut-wrenching fall of 457 points in the sensex over five trading days since January 5, investors have begun to scout for answers.

The BSE 30-share sensex closed at 6222.87 today, a net loss of 85.67 points or 1.36 per cent.

Technology titans will announce their third-quarter results this week ' Infosys tomorrow and TCS on Thursday ' and the markets have been waiting with bated breath to see whether the corporate trendsetters are able to beat market expectations.

Foreign institutional investors, who turbo-charged the rally in 2004, have been strangely silent in the first fortnight, straining to catch the signals from global markets as the dollar begins to rise ever so slightly and the air is thick with talk of another hike in interest rates in the US.

Today, Infosys slumped by Rs 23; bank major SBI fell by Rs 11 and battle-weary Reliance Industries ' which is in the middle of the biggest share buyback programme in the country ' shed Rs 8.

Those are not the sort of news that retail investors want to hear. There are other straws in the wind: a hawker near Jeejeebhoy Towers, which houses the BSE, says the paperback edition of Benjamin Graham's Intelligent Investor ' considered a bible of faith for investors ' has started to wane after peaking in December.

Not everyone is woebegone ' at least not yet. 'Markets have their own way of correcting,' says Girish Nadkarni, chief operating officer, international business and placements at IL&FS Investsmart, an institutional investment firm.

The bull rally in the latter part of 2004 was swift and a lot of that rise was on account of FII inflows. In 2004 alone, foreign investors shovelled as much as Rs 38,965.10 crore into Indian stocks.

They have taken money out of the market in the past few days, but the draw-down of Rs 190 crore is loose change when compared with what they invested in 2004.

'The FII flows have moderated and so have the outstanding positions in the futures and options segment,' says Ved Prakash Chaturvedi, managing director of Tata Mutual Fund.

He expects foreign investors to stay on the sidelines until there are clear signals on the dollar's movement. The greenback was pummelled last year against all currencies, including the rupee, but has just begun to show signs of a slow resurgence.

'India is an important growth story in the global equity markets,' Chaturvedi says but advises retail investors to be cautious.

He feels investors should wade in only if they have a long-term perspective because the short term is going to be choppy, jumping 10 per cent either way from current levels.

'No market remains steady,' says Gul Tekchandani, an expert. 'This is a bull market and corrections are sharp and huge.'

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