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A sense of deja vu

Seven years later, like SRK felt in the second half of Om Shanti Om, there seems to be a familiar ring about the goings on in the financial world and media, writes Ashok Kumar.

india Updated: Jan 18, 2008 20:32 IST

Shah Rukh Khan's latest blockbuster,

Om Shanti Om

is a typical Bollywood 'masala' film that interestingly traverses two time frames—the past and the present.

Circa 2000. The turn of the century is better remembered by stock-market buffs worldwide (and not too fondly considering the events of the year that followed at the bourses) as Y2K. It was witness to the analyst fraternity and the financial media (by and large) in India, believing that Infosys and Wipro would be flag-bearers not just of the Indian bourses but also at the NYSE and its likes over the next couple of decades.

Considering that these IT majors were delivering close to triple digit growth figures which sent market participants into raptures every time they made a result announcement, some television channels jumped onto the bandwagon and propelled the status of the Infosys post-result meets into stratosphere, an event second only to the great 'Indian Budget' annual event.

Believing that historical P/E multiples of 150-200 were par for the course, based on forward P/E's calculated for half a decade down the line, investors were led to believe that unlike the previous times, this rally was for 'real'. Unheard of companies with an IT tagline to their names laughed their way to the bank as gullible investors lapped up their IPOs priced at ridiculous premiums.

There was a spate of articles revolving around the wealth of Azim Premji, the promoter of Wipro and his ranking among the richest in the world. Given that the Wipro stock had a relatively low float at that point in time, it would not surprise me, if the low profile-high achieving Premji was catapulted to the top of the pile for a few hours if not days.

We all know how that party ended and the grim aftermath for a couple of years.

Seven years later, like SRK felt in the second half of the Bollywood blockbuster, there seems to be a familiar ring about the goings on in the financial world and media.

Reams are being written on which Ambani brother is now the richest man in the world and at what price who will get ahead, and in turn, at what price, the other will again nose ahead.

Beyond this drivel that is being dished out and lapped up by 'neo rich patriots', the scenario seems eerily familiar.

IPOs of all hues have hit the market and threaten to continue to do so and the ongoing secondary market boom abets the machinations of 'grey' market operators who ensure a premium listing to almost every stock. To cite a recent example, cast a glance at the stock price of the recently listed Burnpur Cement and compare it with not only its dismal track record, but also its prospects.

Yet again, words like infrastructure, power and retail are enough to justify inexplicable premium demands and investors are now behaving akin to a pack of wolves baying for blood.

A sense of Déjà Vu? Or, is it different, this time too?

The author heads Lotus Knowlwealth and can be contacted at