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Market Watch | Down but not out — yet

Everything I saw in Kolkata convinced me that people were down but not quite out, yet, writes Udayan Mukherjee.

india Updated: Feb 17, 2008 22:38 IST

I was in Kolkata over the weekend to host a CNBC TV18 investor camp. To me, this was an important gathering, as it would tell me a whole lot about retail sentiment at this juncture. Kolkata is an important investor hub and I was meeting nearly a thousand investors under one roof for the first time since the big January sell-off. To be honest, I half expected to see thin attendance, irate investors and sentiment bordering on total apathy. I was pleasantly surprised.

Yes, the mood is bad. People have lost money, but not hope. I spotted regret but not bitterness. It was refreshing to see people owning up for the mistakes they made rather than point fingers at others for their losses. The biggest surprise was that they wanted to know about good quality stocks to buy and good mutual funds to enter on further dips. Many of them said they were holding on to their Larsen & Toubro, State Bank of India, Reliance Industries and NTPC stocks, confident that they would be higher in a year's time. No, they had not redeemed their equity mutual fund units, instead they were looking to add if the Sensex fell to 15,000 levels. Of course, there was fear and despair too. A lot of people are stuck in their Reliance Petroleum, IFCI, and Reliance Natural Resources scrips at much higher levels. Losses have not been fully booked there, traders are waiting for a bounce to exit. There is disappointment on the Reliance Power listing. Many have booked losses, others are waiting for Rs 430 to get out. They swore never to get carried away by grey market quotes or to extra leverage on stock futures. They asked me if I felt the markets would climb back to highs by March 2009. I said yes, I believed so. They did not snigger but shook my hand warmly.

Everything I saw there convinced me that people were down but not quite out, yet. In earlier bearish spells, following savage corrections, I have seen complete apathy. Investors just switch off completely. They do not want to look at the screen. Somehow, it has not come to that yet. Maybe because we have not seen a major time-wise correction yet, the damage has been more on the price front. If the market remains in a lower range for months and mid-caps continue to grind down, failing to recover, we could come to that point of a total switch-off. Sentiment is bad now but it has not reached the tipping point. Investors are stung but seem to be have learnt from their mistakes. The mood at the camp was entirely constructive, there was a sense of rebuilding after the debacle. I just hope another downwave does not come and drown this hope. Sentiment is too fragile now to withstand another shock. I came back from Kolkata full of hope that Indian retail investors have not given up on their equity market. They will come back again and maybe this time they will enjoy, responsibly.

Udayan Mukherjee, Executive Editor, CNBC-TV18