The Moolah in the Market

Wednesday , 3 pm , Dinesh Khanija , Investment Analyst on CNBC
‘ The market is testing these levels and it could probably hit the 11200 to 11500 levels in the next 2 trading sessions ., said the analyst confidently .’.. in fact from now there would be a market correction of upto a 500 points and it will face resistance only around the 9500 levels . That’s a 20% downside . From now on the retail investors would jump into the market , the foreign institutional investors have run out of steam and even local institutional investors have dropped volumes . The number of rising stocks has reached a plateau .’


Friday , 12 pm
The market crossed 12000 points and some stocks hit their lifetime highs . Foreign inflows continued unabated . Confident analyst , Dinesh Khanija was not available for comment .

A month earlier the market had crossed the 10000 levels when every analyst worth his salt said that the market would crash post this level and caution was advised , but the market broke the 11000 number in a week and then crossed the 12000 level baffling everyone in the stock trade . We are now bigger than the Dow as an index number . Where is the market headed , why is it crossing level after remarkable level rapidly ? Right now , in the summer of 2006 , there are no answers , just a couple of stock pickings to make a killing .

Stock market money making has been a subject of enormous discussions and since the free trade policies of the government , spearheaded by Narsimha rao and Manmohan singh in 1991 , just as I has passed out of college , the stock market had created a new set of millionaires who create wealth trading stocks . While the handful of Kolkatta’s super rich have created enormous wealth and kept it through the stock market , Mumbai has phenomenal number of stock market millionaires . Delhi doesn’t trade in stocks as much so their stock pages are pretty unanalytical and colourless , they make money through raw trade .

My first stock buy , am the first entry in the State Bank of India’s register for stock Invest scheme in December 1991 at their office in Broadway in Chennai , was the auto anciallary company India Piston Rings , a subsidiary of the local Murugappa group . Hundred shares were allotted to me from the Initial Public Offering worth a thousand bucks , whose value today is around twelve thousand bucks .A thousand percent appreciation .

I understood the meaning of real wealth when at the end of the stock scam in 1992 , the Central Bureau of Investigation ordered the scamster Harshad Mehta to pay Six hundred and forty five crores as fine for his stock manipulations and insider trading . And Harshad Mehta agreed to pay back the amount in six cheques from Monday thru Saturday . I wondered about it for over a month . What kind of money was that .

Dhirubhai Ambani understood the meaning of the stock market when he periodically used the market to fund his industrial expansions instead of borrowing money from the banks . His issues were mega scale , just like his projects and he must be accredited to singlehandedly teach India equity investment strategies . Reliance Petroleum is the issue I remember created such an impact for its size when it was listed .His sons still do the same .

The World is truly flat and we can feel it in the billions of dollars chasing the Indian stock market , they say at five billion dollars we are a ten percent of the investment made in the Chinese economy .

Services stand where agriculture once stood , towering over the contribution to GDP with a fifty five percent share . The other forty percent is shared between the agriculture and manufacturing . Service industry has seen categories like Cable TV and radio , part of the media and entertainment industry hitting 55000 crores today from 3000cr in 1990 and Telecom becoming a $15 billion industry and Retailing with $100 billion in sales employs 8% of the country’s workforce with banking and real estate growing rapidly , India is moving rapidly to becoming a developed country Also, globalization has meant that the Indian economy is intergrated to the word economy is some very complex ways . For instance , experts say that much of the sensex’s current rise is due to an appreciation in the dollar, which has inturn spurred Indian software stocks, and three-fourths of such companies’ revenues come from exports to the US market.

Though we may be the same as the Dow Jones industrial average at 11000 points each , in terms of market cap, the Dow obviously wins hands down. The market cap of the world’s largest economy is estimated to be about $30 trillion approximately (a trillion is a thousand billion), while the sensex’s market cap stands at about $500bn. The US is a mature economy, growing at a much slower rate than India’s. Ours is an emerging market where the economy is expanding at over 8% and is currently viewed as a darling of investors,” said Edelweiss Capital MD, Rashesh Shah. While everyday crores of investor wealth is created , we’ll get to be a developed economy in another fourteen years or so .

In the meantime , I presume , one keeps busy making his moolah !