Dangerous Curves

HH: Thanks for this interview.
Ms Sensex: You8217;re welcome, but please hurry, traders are beginning to log in8230;we have about 15 minutes.

First things first. What was this 265 point fall on September 22 all about?
You tell me. It is millions of people like you who influence this number. It was 265 points last week, it was 565 points on May 17, 2004 and 570 points on April 28, 1992. These are mere numbers.

Yes, but still, after rising by a 1,000 points in 55 days, and then by another 500 points in another nine, this crash seems to have unnerved people.
That8217;s funny. First you cause the rise and fall, and then you blame me for it. Speaks for an illiterate journalist.

Uh8230;
Let me explain. You see, I8217;m not a static figure, I8217;m a dynamic, living entity. My composition changes. For instance, can you imagine me existing without ONGC, Infosys, NTPC?

I guess not, but what are you getting at?
Just illustrating my dynamic nature. Infosys logged on to me only in November 1998, when it replaced GE Shipping; ONGC slipped in during November 2003, replacing GlaxoSmithkline; NTPC powered me in June 2005, replacing HPCL. As and when a company matures, gets investors interested in it, increases trading volume and is hugely capitalised, it comes into my fold.

So, why do you rise and fall?
What else should I do8212;go in one steady horizontal direction? You see, millions of investors from India and the rest of the world pump in thousands of crores of rupees every day into Indian stocks8212;most of which are divided between me and that vamp, Nifty.

Do I notice a twinge of jealousy?
Jealous? Me? Of that tart? How dare8230;

HH: Interrupting No ma8217;am, I was only wondering why you and Nifty don8217;t rise and fall together or why Nifty is bigger than you.
This is annoying! Well, for one, we comprise different entities. She goes around with 50 companies8212;imagine that. As for me, I am the exclusive preserve of India8217;s top 30 companies. So, when investors buy and sell these companies, depending upon how much they8217;re willing to pay for each company and the group for the 30 companies together, I move up or down.

So, you only reflect your underlying assets.
I prefer to call it my inner being, but yes, you get the drift.

Would you like to tell our readers where will you be tomorrow or next week?
I am deeply hurt by that question!

Hey, what did I say? I apologise, but what8217;s wrong?
You see, if you wish to grow tall by standing on my shoulders, if you want to create wealth, you need to give me your commitment.

Commitment?
Yes, I know it8217;s strange that I8217;m making this proposal, but that8217;s the way it is. You see, if you are in for a one-night stand with me, the level of your knowledge has to be far more sophisticated than all the millions of investors put together. And no one8212; not Warren Buffett, not P. Chidambaram, not even Manmohan Singh8212;has that capability, that insight.

But8230;
Please don8217;t interrupt. So, in order to profit, you have to have a long-term relationship with me.

How long is long?
Good question. Anything more than five years and you will have a high probability of making money. More than 10 years you will make money, the extent may range between 6 and 10 per cent per annum. It is only when you invest for more than 15 years that I can guarantee you a stable, steady, even attractive, above the risk-free rate of return.

But that means I need to know each of your 30 constituents intimately before coming to a decision8230;
Analysing companies is not your job, writing is. So, just as you don8217;t have doctors writing editorials or editors curing patients, you don8217;t need to spend time acquiring a skill that is abundantly available.

Where?
Dancing around me is a whole industry of experts, whose job it is to analyse companies and deliver returns. For you, the best vehicle would be a mutual fund. If you want to ride me you should go in for an exchange traded fund that mimics me and you8217;ll get the returns without doing anything other than getting into a systematic investment plan.

One more question8230;
Sorry, our time8217;s up. The market has opened and the trades are flowing in. It8217;s like they say, 8216;8216;It8217;s Showtime, folks!8217;8217;