May 15, 2002|
Eye the long term
The bourses continue to display a pendulum like momentum, up one day, down the next. This underlines the dilemma of the market movers, stretching for over a year now. The Sensex last saw the magic 4,000 mark on March 8, 2001. How long will this level elude investors?
Going by recent trends, both economical and political, not anytime soon. Though the RBI governor has indicated a 6-6.5% GDP growth in FY03, others are not as optimistic. The CII has targeted a less grand 5.2% growth and eminent economist, Dr. Mahesh Vyas of CMIE is looking at a 4.7% GDP growth. One is likely to trust the CMIE or the CII estimates, as the RBI is likely to back the government estimates. So, even FY03 is unlikely to be a high growth year.
Also, the present government's term expires in 2004. The ruling coalition is clearly not looking in top form. Electoral setbacks, Gujarat and the ire of the middle class over 2002-03 budget, have clearly put the focus back on political mileage. A cabinet reshuffle is on as an image boosting effort. Given this backdrop, one can expect the next budget to be populist one, giving economic reforms a leg down.
On the external front, tension with our neighbour continues, with no results on the ground. It is clear that this status quo is unlikely to stay for long. Though the US has sent its emissary to cool off temperatures, New Delhi is unlikely to back down without some perceived gains. So the external situation is also fluid.
But despite the aforesaid concerns, we remain long-term optimists. India is a growing economy and with improved infrastructure investments should pick up. So may be 2003 is not looking shiny, one could invest with a more longer-term view. Stock picking continues to be the key. This is clearly underlined by the fact that though the indices have not really moved in the last couple of months, there has been widespread interest in the broader market.
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