Personal Finance: Yesterday Once More

PERSONAL FINANCE
Yesterday Once More

Stockmarkets slammed investors, real estate was in the doldrums, and interest rates inched down. On the whole, 2001 was the year of stumbling for investors.

By Shilpa Nayak

Phew! to those who fancy the stockmarket, the passing of 2001 may come as a welcome relief. It was a year when the Sensex, which opened the calendar on a cheery note, buoyed by a softer interest rate regime and a good Union Budget, plummeted to an eight-year low of 2,594. It was also a year when retail investors, whose confidence was slowly growing since late 2000, suffered a setback, chiefly due to the collapse of UTI's US 64 scheme. To accelerate the downhill slide was a scam, involving the market's biggest bull Ketan Parekh whose defaults, reminiscent of the Harshad Mehta scam of 1994, shook up not only the stockmarket but also the banking system.

The dotcom bust in the US and the tech stock slide had a ripple effect on the Indian market. With earnings of most Indian software companies coming from business in the US that wasn't surprising. Consequently, Indian tech stocks, erstwhile drivers of a boom, tumbled, leading the general slide on the bourses. A quick view of the tech massacre: Infosys fell from its peak of Rs 6,895.25 (in February 2001) to a low of Rs 2,197.80 (in April 2001), Wipro crashed from its peak of Rs 2,997.85 (in February 2001) to Rs 852.75 (in April 2001) and Satyam plummeted from Rs 428.05 (in January 2001) to Rs 113.10 (September 2001).

Infotech being out of favour, alert investors moved to the relative safety of FMCG and pharmaceuticals stocks. Hindustan Lever, for instance, stayed above Rs 200 this year. And Dr Reddy's Labs was the biggest gainer (25 per cent) among the Sensex 30 scrips.

What about 2002? ''The market looks attractive now and is poised for a fundamental and technical rally,'' says Suhas Naik, Fund Manager (Equities), IL&Fs Mutual Fund. ''We expect tech to lead the rally with cement, pharma, and refineries to follow.'' Indian pharma companies, with their new penchant for research and generic forays, could evoke interest. Investors would do well to watch the auto segment too. True, car sales in 2001 have been flat. Yet analysts believe there could be room for a revival in demand. Of course, much would depend on a general economic recovery.

So where do you put your money in 2002? Believe it or not, equities are still the best bet. And, by the way, next December, don't say we didn't tell you so.

Issue Contents Write to us Subscription Syndication