Fighting The Low After The 'High'

The sensex after recording a dream upswing crossing 12600 points on May 10, registered a fall of 826 points to close at 11,391 which was the biggest ever in the history of Indian stock market. The fall marked the start of a downslide which has still not stopped. So is the bull market over? 

Those Investors who had shifted from equity shares to commodities in order to neutralize the risk factor have also lost heavily as global commodity prices too have plunged sharply.

Forced by the rising cost of living and falling interest rates in fixed deposit schemes of banks and post offices, the common man suddenly seemed interested in stocks and mutual funds. Applications for opening of demat accounts reached new heights. But now after the May 18 debacle and the decline thereafter, the common man is no longer much interested in the markets.

While opinions differ on what really triggered the collapse, there seems to be unanimity that the three major reasons were: correction by the markets, pulling out by the foreign institutional investors (FIIs) and the general meltdown in the international markets though strictly not in this order.

The India story is still an attractive one, driven by the demographics of youth and the aspirations of a large middle class population. With growing discretionary spending power, people who have long been denied goods of any quality have now obtained it, thanks to competition. What puts brakes on the story is the quality of our polity and its inability to take sensible action.

Correction? Flight of FIIs? Poor regulatory control? Stronger US dollar? Tumbling emerging markets? Whatever be the reason for the huge drop in the Sensex, the confidence of the average retail investor has taken a strong beating.