It’s been a long week at the bourses, worldwide… | india | Hindustan Times
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It’s been a long week at the bourses, worldwide…

india Updated: Jan 25, 2008 23:19 IST
It’s been a long week at the bourses

My management class students know only too well, the point that I often reiterated in the management class that between Greed and Fear, lies Hope and Despair.

After the unbridled Greed witnessed, especially at the turn of the New Year, we have seen Fear on the first day of the week. On Tuesday morning, when the markets shut within seconds of opening, there was Despair and on Wednesday, Hope resurfaced within minutes of a gap up opening following Ben Bernanke’s Rate Cut gambit.

Tuesday and Wednesday got rolled into one on Thursday when the bourses opened strong on the back of a late revival of the Dow Jones index in the USA before going into a free fall following rumours of yet another international bank being under the weather.

Another topic that we cover in the management class revolves around Value and Growth investing. During a brief stint as a guest anchor during the May 2005 market crash on a television channel, I realised that many so called ‘experts’ who appeared on that show were even less clear than some of my students about the clear difference between the two. Perhaps that explains how easily the Indian stock market, which has been sold far more aggressively than it ever was in the past to foreign investors, earned the ‘India Growth Story’ tag. We started off as a ‘India Value Story’ in 2003, when the Indian equity market as a whole appeared grossly undervalued, not just on a relative but also an absolute basis.

By 2007, the Indian bourses had outgrown even the ‘relatively undervalued’ tag and hence needed a new label, which was when the ‘India Growth Story’ term was coined.

It served us well for a year as foreigners bought not just the story, but also our stocks. Mind you, the more recent foreign ‘converts’ to the India Growth Story even bought into mid-cap stocks which had till then been a strict no-no for that class of investors. Now, this story was so well sold even by our media that even retail investors who were till then content with the so called ‘Hindu growth rate’ indexed fixed deposit returns, jumped into the fray believing it to be a one way ride to monetary glory. Now, was that prudent or simply uninformed investor Greed? That it has now turned into Fear might well ensure that they stay out of the equity market for several years here from.

Little wonder then that statistics show that less than 5 per cent of investible funds in India find their way into the equity market. For now though, we continue to live on Hope even as we realise that Despair lurks round the corner.

And yes, for those who did not get carried away with the many labels bandied and viewed the stock market merely as an avenue for superior longer term returns, chances are, life goes on as usual, with a daily sunrise and sunset.
Republic Day Greetings!

The author heads Lotus Knowlwealth and can be contacted at