It's that time of the year again: when the stock market threatens to shake itself out its stupor and, as a natural progression, the soothsayers begin creeping out of Dalal Street's woodwork. You'll find them everywhere-on television channels, personal finance portals, discussion boards-with a list of ostensibly compelling reasons why the market's benchmark indices can only head northwards, a minor "correction" here and there notwithstanding. Let's welcome the silly season.

After plumbing the 2,800 depths for some time, the Bombay Stock Exchange's 30-share Sensex finally found the steam to inch past the 3,000-level last fortnight. Doubtless, there were some very good reasons for that happening. These include Reliance's huge gas opportunity, Hindustan Lever finding more weightage in the Morgan Stanley Capital Index and a clutch of the frontline it services companies clinching global multi-million dollar projects. A few analysts were tempted to link the visit of Microsoft Chairman Bill Gates to the run up in it stocks last fortnight, but that's nearly as ridiculous as expecting Elton John's recent concert in Bangalore to herald the end of Indi-pop (much as that would have been welcomed).

Doubtless, there was good news last fortnight. But not enough of nuggets the optimistic kind to go stock-shopping. And hardly enough to propel the market indices to the levels being dreamt about-3,700, 4,000 and even 6,000 by that wildly optimistic, never-say-die breed of punters. The bigger picture too is cheerful, we're told: India is one of the fastest growing economies in the world, our foreign exchange warchest is full up and the corporate sector's bottomlines have a pleasant streak of black around them.

Unfortunately, equity indices aren't fuelled by talk, however compelling or loud (or stale) it may be. That needs money, preferably the green stuff, which has been conspicuous by its absence for most of the current year. So is this the moment the foreign institutional investors (FIIs) were waiting for?

The answer to that billion-dollar question may not be found in the country's financial capital but more likely at the Centre. If foreign investors are presumably queuing up with their money bags, they would be looking for clarity from the government on two vital issues: One, is the ruling party committed to reforms, eager to (belatedly) kickstart the second-generation part of that agenda, and willing to implement the unpopular bits of that schedule? Two, will the privatisation process be put back on the rails, or will some impractical middle path be worked out? If, for instance, the government, in a bid to placate the rampaging anti-disinvestment lobby, decrees that only loss-making public sector undertakings will be sold, you can kiss goodbye to those much-longed for dollars, and consequently the much-touted stockmarket rally.

It's really that simple. The feel-good sentiment-which even die-hard analysts of CEPS and RONW will agree is the most effective fuel for a lively market-lies hidden somewhere in South Block. You don't need sniffer-dogs to locate it; a few good men in the present coalition khichdi posing as a government could well do the needful.

Still, we keep shifting the telescope westward, hoping to latch on to some stray signs of an economic revival in the US markets, and then expect via some convoluted logic that upswing to rub off back home. Perhaps it could. But only if the prelimary indications of a revival in the West-increased consumer confidence, earnings targets being met etc.,- aren't signalling a false dawn. Mr. Bush's designs on Iraq and another terrorist strike, could put paid to all those visions of revival and rallies.

The short point is that even if the US economy does rebound, don't expect the ripples to reverberate back home in a hurry. If foreign money it is that is going to drive up Indian markets-one can't think of anything else that can-the reforms wagon has to be driven forward, and the disinvestment bogey has to be exorcised, hopefully for ever. If you're convinced that's going to happen, go ahead, put your money in equity. If not, it's safer under your pillow.