THE STOCKMARKET SCAM: To Ketan Parekh must go some credit for the turbulent stockmarkets of 2001-2. Beginning March, Instances of diversions of bank funds to the markets and broker-corporate nexus ruled the headlines.

L'AFFAIRE UTI: The June 30 decision of UTI to suspend trading of its flagship scheme US 64 for six months shook things up. Subsequent investigations raised questions on investment decisions motivated by factors other than soundness.

THE RUN MADHAVPURA: Starting March 2001, co-operative banks collapsed like dominos. Madhavpura started the trend. Then came repeats with General Co-operative Bank, Charotar Co-operative Bank, and the Rupee Co-operative.

THE GOVERNER'S PERCEIVED UNKINDNESS: Globally, interest rates went south; economists argued for India to follow suit. RBI guv Bimal Jalan complied and slashed the bank rate to 6.5 per cent, but investors in bank deposits felt the pinch.

The next three weeks are unlikely to change the fact that 2001-02 was a bad year to be an investor. If the bear-run post Budget: 2001-02 didn't get them, then the great tech slowdown did. And if they managed to escape that, then the behaviour of the markets post 9-11 surely did. Smart investors-fine, some consider that an oxymoron-may have managed a return just into double digits on the basis of some contrarian plays, but for the market's lemmings, the year brought no cheer. Worse, conservatives who had squirelled away their savings into fixed deposits in banks saw a man called Jalan pull the rug away from underneath them by announcing a cut in interest rates. And those who, in search of the best of both worlds-higher returns and the safety of a deposit-had deposited their earnings with co-operative banks (they promise returns that are a 100 basis points higher) saw a succession of them go down under the weight of irregular transactions.

	Sensex Watch
	The Falling Rupee
	Red Cherry Fortunes
	The Town That Wants To Be
	Vern With A Vengeance

The only investors who have reason to remember 2001-02 fondly are those who opted for debt funds. The return on debt funds shares an inverse relationship with interest rates; ergo, with interest rates dipping in 2001-02, investors in debt funds earned returns in the 25-30 per cent range, the highest in the past 15 years.

So, what's in store in 2002-03? For one, debt funds won't deliver as much as they did the previous years. ''Investors in debt funds have to be content with a 8-10 per cent return,'' says Nilesh Shah, Vice President (Private Client Group), Kotak Mahindra. The reason: both the international and the local environment suggest interest rates will remain stable or probably dip marginally, this year. What's certain is that a cut in small savings rate-50 to 100 basis points to bring it on par with ban rates-is imminent. That means investing in public provident fund (PPF) and the like won't be such a hot idea in 2002-03.

The opportunity that will be presented by the stockmarkets next year, though, will more than make up for everything else. ''The irony is that while interest rates are down, equities too are undervalued,'' says Saumil Sheth Manager (investment advisory), Investmart India, echoing the predominant grouse of investors. The low valuation will help in 2002-03, provided investors know where to look. That won't be easy. In 2000, the global tech boom made tech scrips an obvious choice for investors; there are no such clear favourites now, only a clutch of hopefuls. Still, no one is complaining. Vijay Venkatram, Manager of private banking at HSBC, shifted the entire allocation of assets in his long-term growth portfolio to equities in December 2001. ''How long the market will go up is conjecture. But no one is bearish.''

The year that is to come, then, may bring with it better news for investors. Investing in a market consolidating at 3300-3400 levels isn't all that bad an idea; the government's success at pushing through the disinvestment of some public sector undertakings has already manifested itself as a positive stimulus on the market; and scams, however strange the happenings on the bourses may seem, don't happen every year.

-Roshni Jayakar

SENSEX WATCH
Sensex Futures: Up Or Down?
Five analysts present their take on the Sensex.

Ramdeo Agarwal,
Director, Motilal Oswal
Securities: 3,800 by June 2002
''I am bullish. It's the magic of low interest rates that will boost the markets. While there is a 60 per cent chance of the Sensex touching 3,800, in case it does skid it could go (down) to 3,200 levels.''

S.A. Narayan,
Executive Director and CEO, Kotak
Securities: 3,800-3,950 by June 2002
''The PSU disinvestment and some activity in the technology sector will push the Sensex higher.''

U.R. Bhat,
Chief Investment Officer,
Jardine Fleming Asset Management (India): 3,800-4,000 by June 2002
''It will, if the budget is good. There has been aggressive and true privatisation in the last few weeks and the market should start valuing PSUs accordingly. This will have a bandwagon effect.''

Brian Brown,
Managing Director,
Head of Equities,
Salomon Smith Barney: 4,050 by December 2002
''The pick-up in economic activity should have a positive impact on the market.''

Deepak Mohoni,
CEO, Trendwatchindia.com: 4,000 by June 2002
''We are in a bull market.''

Saurav Ganguly, Captain Indian Cricket Team

RED CHERRY FORTUNES

Alex Von Behr, CEO, Coca-Cola India

One took over as CEO of coca-cola India in January, 2000. The other, as captain of the Indian cricket team in February, 2000. Neither started off with a great legacy; here's how the two stand now (incidentally, Pepsi poached Saurav from Coke in November, 2000).

-Vinod Mahanta

RUN
The Falling Rupee
The queer case of the Rupee Bank raises more questions on the functioning of co-operative banks.

HQ of Rupee Co-operative Bank (outside) in Pune

It happened again. The country's third largest urban cooperative bank, the Rupee Cooperative Bank, found itself in scalding waters mid-February when the Reserve Bank of India ordered Maharashtra's Registrar of Cooperative Societies to supersede the 12-member board of directors and appoint an administrator. The Rupee Bank holds deposits of around Rs 2,150 crore and RBI's decision caused a mini-run on the bank, especially in Pune, which hosts 19 of the bank's 36 branches. ''People panicked because they associated it with what happened to Madhavpura,'' says Y.G. Kavade, Joint General Manager, Rupee Co-operative Bank. ''Our bank is in a position to honour any financial liability.''

The co-operative bank's troubles began when RBI observed that the bank had not followed guidelines on asset classification and provisioning, thereby resulting in a short provisioning of Rs 78.64 crore. Among the Central bank's observations was one about unsecured loans granted to directors and their relatives, far in excess of prescribed ceilings. Angry board members rushed to the Bombay High Court and issued a public statement, about RBI's move being ''a frightening act against the entire co-operative sector.''

Finally, it was a statement issued by RBI-''... its overall financial health is not a cause of concern for depositors''-that helped assuage the concerns of customers. The bank has begun to limp bank to normalcy and a former State Bank of India executive M.R. Joshi has been appointed administrator. Says B.G. Yashod, Additional Commissioner, Registrar of Co-operative Societies: ''This is a signal to other co-operatives to streamline their working.'' Will they?

-Anjali Cordeiro

DEVELOPMENT
The Town That Wants To Be
Pune's ambitious Magarpatta Township project runs into some rough weather courtesy the tech drought.

Satish Nagar: Ambitious Magarpatta township in Pune

It was sheer scale that fetched the magarpatta Township Development Project lots of media-coverage (including a previous mention in these columns): after all, it is hard to ignore a 400 acres of development housing 12,000 apartments, 4 million square feet of office space including a cybercity, a hospital, schools, an amphitheatre, and a 500,000 square feet mall. Scale, and the intriguing fact that over 100 families pooled in ancestral land in an obscure, but central, Pune-neighbourhood called Magarpatta to kick-start the development.

The great it trough, however, has forced Managing Director Satish Magar to focus on the residential part of the development first. ''With the downturn I decided it made sense to get life into the city and then concentrate on the cybercity.'' And with it-enabled services supplanting software as the next big thing, Magar says the cybercity will largely target companies in this space. The factors in favour of Magarpatta? Low cost (Rs 1,000 a square foot for residential space; Rs 1,850, for office space); Pune's growing relevance as a city to do business in; and the city's carefully nurtured image as a destination for tech companies.

Today, several families have started moving into Magarpatta City, a school will open in June and a hospital in mid-2003, and 250,000 square feet of office space should be ready by the end of 2002. In six years, asserts Magar, the Rs 2,500 crore project will be completed, and Pune will have its own city within a city.

-Anjali Cordeiro

RURAL MARKETING
Vern With A Vengeance
Audio biggie Philips launches a rural marketing blitz.

Philips CEO K. Ramachandran: Hinterland aspirations

Maha Sangram (big struggle) should be double-Dutch for Philips, but it isn't: that's the name of the company's ambitious rural marketing strategy. ''Fifteen to sixteen new products and a fast moving consumer goods kind of marketing,'' is how Rajeev Karwal, Senior Vice President of the company describes it. First of the 15-16 is a battery-less dynamo-based radio. Every minute of winding translates into eight hours of use-time and, Philips claims, annual savings of Rs 1,200. Still, at Rs 995, the radio costs double that of normal ones and as Jagdeep Kapoor, Managing Director of marketing consultancy Samsika says, its ''long-term benefits may be too complicated for rural consumers''. For its part, Philips hopes the imminent fm boom will help its cause. We're all wound up!

-Abir Pal