It's all about fundamentals!


By

Neerav Nagar
Senior Lecturer (Finance)
Aravali Institute of Management
Marwar Bhawan, Polo No. II, Paota, Jodhpur–342 006
(Rajasthan)
 


Now a days, it does not matter whether we read The Times of India or The Economic times. Headline is same. It is about our lovely and respectable 'Sensex' – God for investors!

Finally, it has gone down. Not only that, it has also taken many people along with it!

What has happened? Till recently, it was a party time for the investors over last many months. Even beers had come out of the jungle to accompany bulls. People kept on buying in frenzy as if a discount sale was going on. It hardly mattered which share it is. I had heard, "Valuations are attractive", "Fundamentals are strong, you see!" People were talking about the Great Indian Growth story, huge quantity of foreign exchange reserves and many more positive factors. Thank God! The only thing they were not talking about was Indian cricket team's good performance. They even ignored rising oil prices.

Now, scenario has changed. Market has crashed. Nothing has changed about India, its growth, competitiveness and foreign exchange reserves are also still intact. Again somebody said, rising oil prices is a concern. But is it a newly discovered phenomenon? No. It always existed, even during the good times.

Same lot who were making quick bucks earlier are now out on the road, burning Finance Minister's effigy in spite of knowing that he is not the proprietor of Sensex. After all they have to take some blame on themselves. They were on a wild treasure hunt.

It is not a million dollar question – finally, who gained? Since, it is a zero-sum game, somebody must have won. Who? My guess is as good as anybody's. FIIs! Statistics tell us they are selling. It cannot be just because of a draft put up on a website for public comments. These kind of rules are not made overnight. Intelligent investors can always foresee them. So, why this blood bath? Are we witnessing another scam or is it a profit maximization strategy of FIIs. I have got a food for thought. What do you say?
 


Neerav Nagar
Senior Lecturer (Finance)
Aravali Institute of Management
Marwar Bhawan, Polo No. II, Paota, Jodhpur–342 006
(Rajasthan)
 

Source: E-mail June 6, 2006

     

Back to Articles 1-99 / Back to Articles 100-199 / 200 onwards / Faculty Column Main Page

 

Important Note :
Site Best Viewed in Internet
Explorer in 1024x768 pixels
Browser text size: Medium