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Eye the long term...

Jul 13, 2002

With the Dow falling over 7% and the NASDAQ over 5% this week, globally bourses caught a cold and investor confidence continued to suffer. India was no exception, but the fall in indices was not very steep comparatively. One could still see broad based buying in mid cap counters. It is not difficult to see why Indian bourses managed to hold their own even when western markets suffered. Infact most Asian bourses saw limited declines. With India expected to grow at 5-6% in FY03, it is among the few regions on the globe to be able to hope so. Also, overall the noise levels in all sectors are slowly turning positive. In short, there is anticipation in the air.

With the new Finance Minister expected to make a policy statement by the end of this month, most investors are adopting a wait and watch attitude. However, with the divestment ministry continuing their good work and deciding to put HPCL and BPCL on the block, the feeling is positive. Hopefully, monsoons will do their bit and we may see a revival in rural demand.

Cement dispatches are up, auto companies are clocking amazing growth numbers, engineering companies are sitting on huge order backlogs, banks continue to log in growth with lot cleaner balance sheets and Indian tech majors have till now recorded good results. In contrast, the US continues to get hit by accounting problems, earnings hazards and concerns over sluggish employment numbers. Going by this one can expect Indian bourses to have a relatively good FY03.

But then, bourses are bourses and they do funny things. One scam and the whole positivism will fall like a pack of cards. We continue to favour stock picking with an eye on the long term.

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