Sumeet Rewari hasn’t seen the squash courts in one and a half months. The 32-year-old assistant vice-president at Way 2 Wealth Securities says thanks to the booming stock markets, there’s simply no time. ‘‘The phone rings 10 times more, volumes have shot up, my workday ends at 9:30 pm instead of the usual 6:30.’’ Nilesh Shah, president (broking) at Edelweiss Capital, heartily seconds that. ‘‘There’s less time to play golf, I’m now working 15-hour days.’’ Of course, his firm’s broking income is up by more than 100 per cent. ‘‘Business is booming for all. Anyone who tells you otherwise is bluffing.’’ At veteran broker Ashok Khandwala’s office, these days all 32 phone lines are utilised full-time. Three years of listless stock markets put a lot of the smaller broking firms on Mumbai’s financial hub Dalal Street out of business. But in the last six months, fortunes have reversed almost unbelievably. On Monday, the benchmark Sensex smoothly whizzed past the 5,000 mark for the second time in its 14-year history. On Wednesday, it closed at 5064.91 points. The boom, which began in May this year, has seen markets soar giddily by over 2,100 points, or 72 per cent. This time it has been fuelled mainly by foreign institutional investors (FIIs), who have pumped in a whopping $4.7 billion in 2003. That’s the highest investment in any year since they were allowed a decade ago. In his 30 years of market-watching, Merrill Lynch’s dapper India chief Hemendra Kothari, has seen it all—the booms, shadowed by those inevitable busts—but he says this time is different. ‘‘This is the real India story,’’ he says. ‘‘The market is now going along with the economy,’’ adds Kothari. He’s happy that sweeping structural changes and greater efficiency have pushed corporate profitability nearly 40 per cent higher in the quarter ended September 2003, and is optimistic about the coming months.Kothari should know. Indian investors have witnessed the boom-bust phenomenon in 1992, 1998 and in 2000. All three times a scam pierced the euphoria and dragged markets lower. This time round, cautious retail investors still haven’t managed to shrug off their concern. These days, maverick broker Rakesh Jhunjhunwala often gets asked that million-dollar question. ‘‘Everyone suddenly wants to invest in the markets and they keep asking me if there’s a scam. As far as I know, there’s none,” says Jhunjhunwala, who has been bullish on the markets for the 18 months now. The feel-good factor has enveloped both stock markets and the general economy in its warm embrace. ‘‘During the tech boom in 2000, the economy was in a shambles,’’ says Shah. Adds Kothari: ‘‘We’re seeing an improvement in our business. Corporate advisory services are picking up and the IPO market is expected to see more activity.’’ The mood change is visible even among Mumbai’s normally reticent Reserve Bank of India officials. ‘‘Growth prospects are better, the inflation outlook remains benign, interest rates and foreign exchange reserves are at comfortable levels and there is adequate liquidity in the system,’’ said new RBI governor Yaga Venugopal Reddy, painting a bright picture earlier this week. So will more money pour in to equity from the debt market, now that the central bank has signalled no immediate rate cuts? “There’s no shift in money from debt to equity. We saw an inflow of Rs 485 crore last month when the bull run was at its peak. Basically, funds are moving out of bank deposits,” says Naval Bir Kumar, MD, Stanchart Mutual Fund. There are those who still advise caution. Investors Grievances Forum chief Kirit Somaiya is circumspect about the abundance of FII money. “We’ve come to the conclusion that there is a serious and urgent need to study the role of FIIs in the current bull run,” says Somaiya, adding, “There is a big rise in speculative trading. It is an unusual one-way upward movement. which causes concern.”
