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January 5, 2000
NEWS
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Where to invest in 2000Niraj Bhatt The stock market has opened with a bang in 2000, gaining sharply on the first two days of trading. Earlier, market experts had predicted the Sensex to touch 6000 points in 2000. Though it is still early days, this target may be surpassed and that too very soon But on the flip side the Sensex is on the edge and a correction is imminent. Small operators and retail investors have both been trapped earlier at higher levels; there is no reason to believe that this can't happen again. Hence investors should be cautious at higher levels. At the macro level, there could be a lot of money coming to the stock markets if the insurance sector is opened up. If domestic provident funds and pension funds are allowed to invest in the stock market, we should see a major rise in the Index. Internet broking will also be a reality this year; it will change the way we trade. Futures trading is round the corner too-index futures will take off this year. Analysts expect a correction from the first day's levels ( when the market shot up 370 points) but the 5000-point barrier could provide a decent support. Thus the rally will continue for the full year but there will be hiccups in the near future. Also, the risk is higher in buying at high prices. However, if investors are smart enough to exit from non-performing stocks quickly (by having a slightly short-term attitude), there could be a lot of money to be made. A good strategy would be to not jump in now but wait for lower levels. Here are some points that equity investors need to keep in mind before investing in Y2K.
Superior returns from equities
But the rally needs to get more widespread in cyclical and industrial stocks. Third quarter results will not be as important as Budget expectations though they could have an impact. But cyclicals (sectors such as petrochemicals, cement, engineering and automobiles) and banking have not really spread much and the scope for appreciation looks decent. Fast moving consumer goods stocks have had a bad year and this is likely to be reversed to some extent. Some multinational pharmaceutical stocks are also; they too are expected to rise. Debt returns are unlikely to be impressive, as inflation has been under control for quite sometime and is expected to remain around the current levels unless some fiscal profligacy happens.
The IPO rush
Last year's software initial public offers like Polaris, Kale Consultants and Hughes Software have given mindboggling. HCL Technologies and Television Eighteen are expected to list at a massive premium. IPOs of Sony Entertainment and New Delhi Television are expected soon. Also many public sector enterprises will be coming out with public issues. The new economy is here.Many software and Internet companies that have been funded by angel investors and venture capitalists in the last year, are expected to tap the market. Many Indian companies are also ready for a listing in the US market: most on NASDAQ, and some on the New York Stock Exchange.
More mergers
Ballistic B Group
Mutual mania
Internal changes
The second is the increasing thrust on better management practices. Companies like Infosys have set a standard as far as disclosures are concerned.More companies are following this model. While things seem generally rosy (except the current whimsical Sensex level), there are some caveats that can nix the rally
The foreign hand
Corporate results and Budget 2000
Operators
Global links
To sum up, this year will continue last year's bullishness and every investor should have an equity exposure, either through stocks or mutual funds. We are in a phase where business is changing everyday and the companies that make the most of the changes will bring returns to investors. |
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