Last year, when the Bombay Stock Exchange bellwether index, Sensex, was sub-3000, the question that everybody wanted answered was, "Will it touch 4000?". Now that, it hasn't just crossed 4,000 but a jaw-dropping 6000, the question that everybody wants answered is, "How long will it stay above 6000?" (By the way, there's another school of bulls that's asking, "When will the Sensex cross 7000?".) At the heart of the uncertainty is fear; fear that the stockmarket may have risen not so much on fundamentals as sentiment. Says Ved Prakash Chaturvedi, CEO, Tata Mutual Fund: "The speed and the steepness of the present rise is the main worry. (The Sensex) has gone up too much too fast."

That means a correction may be round the corner. Although the fundamentals of the economy are strong, some analysts expect the correction to be bigger and last longer. Why? For one, almost everyone-like Principal Mutual Fund's Chief Investment Officer, Rajat Jain-agrees that stocks are not cheap any more. And although there are enough positive news in the economy, investors may not be willing to overspend. "With the markets going up, investors start taking emotional (and irrational) decisions. This can be in the form of ignoring negative news or acting on small positive news," says Nimish Shah, Director at Parag Parikh Financial Advisory Services.

What should you, the investor, be watching for? Here's a list:

FII inflows: The trigger for the present rally came in the form of huge FII inflow ($7.59 billion or Rs 35,154 crore) during 2003-double the previous high of $3.5 billion in 1996. The flow continues, and it may even push the Sensex to 7000 by February, "but if that doesn't happen, market can collapse," cautions Ambreesh Baliga, Vice President at Karvy Stock Broking.

Interest rates: An increase in interest rates can hurt the market in two ways. One, it will increase the cost of finance for companies. Two, it will result in a fall in the prices of long-term debt, affecting the companies that hold them, especially banks.

Oil prices: Though outside the OPEC band of $22-28, international oil prices are now getting stabilised at $30-32 per barrel. But the dollar's depreciation (against other major currencies) has not been included in the price. "If that happens, international oil prices can go up by a few more dollars and being an energy starved country, India will be affected," warns N. Sethuram of SBI Mutual Fund.

Monsoon: The market is still betting on a good monsoon this year. But there's no way one can be sure about it happening. Projections for this year's will start coming in another three to four months, and this will influence market movements.

Then, there are other issues like general elections and growth. But even if one of the previous three factors start going against the market, you can expect a correction to follow. So keep your eyes peeled.

-Narendra Nathan

The Big B-rand
Amitabh Bachchan may well be India's most prolific brand ambassador and celeb endorser.

Nerolac Paints ...
Because he embodies its new larger- than-life and omnipresent image

Reid & Taylor ...
Because he is the perfect Indian second act to Pierce 'James Bond 'Brosnan's first

Parker Pens...
Because the brand shares the actor's spirit of youth, style and attitude

Pepsi...
Because he has mass appeal

Dabur...
Because both brand(s) have mass appeal, and are ageless

Maruti...
Because he and his son bring in a combination of youthfulness and stature and complement the versatility of Versa

AIDS/Pulse Polio campaigns
Because he has mass appeal

Lomani perfume...
Well, the perfume is named after him

ICICI Bank ...
Because of mass appeal, but the brand ambassador contract ended in July 2003, and now ICICI Bank, says "he may work on a case-to-case basis"

Cadbury ...
Because the company thinks he reinforces the brand's now-bruised image of reliability and because of his mass appeal

Sahara City Homes ...
Because he is a director on the board

-Compiled by Dipayan Baishya

DASH BOARD

A
When TVS Motor launched its first indigenously developed bike Victor, unkind critics called it a one-off thing. With the launch of the Centra, CEO Venu Srinivasan has proved that Victor was no flash in the pan.

D
We know we've referred to the CAS debacle in two other places. Still, the original question remains. With Prasar Bharti a corporation, and with TRAI addressing the CAS thingie, what does Minister of Information and Broadcasting Ravi Shankar Prasad do?

Public Issue? Not Exactly
Book-building is good news for IPO makers. Not for a small investor, though.

This year is going to be the year of the initial public offering (IPO), what with Rs 15,000 crore expected to be raised in the next three months. The likes of ONGC, GAIL, Hutchison Max, and Patni Computer will make that hallowed trip down the aisles of the primary market. But arguably the most eagerly-awaited IPO won't be happening in India, but (where else) in the US. Yes, Google, is set to go public, and there'll surely be a long line of investors scrambling to get a piece of the maverick internet search engine major.

Google hasn't yet made a formal announcement, but chances of retail investors getting its shares appear bright, if the grapevine is to be believed. According to some news reports, the search engine company could opt for a combination of the popular book-building route, in which investment banks set the issue price and then distribute shares to their institutional buddies, and the not-so-popular online auction route, which simply allows investors to bid for shares on the Net.

Indian investment banks who are raking it in advising prospective issuers are going to hate me for this (this too!), but I just can't get myself to like book-building. The biggest problem is it favours a chosen few rather than the investing public. This in turn encourages arbitrary pricing (since the investment bank sets the price and then doles out shares to well-heeled clients). Book-building, to be fair, has its advantages. Let's put it this way: If I had a company that I wanted to take public, I would go the book-building way because the investment bank I would have hired would have assured me of a good price, a steady rise post-listing, and of oversubscription.

But alas I have no company, and so no IPO. So I have little choice but to look at book-building through the eye of a common investor. A disgruntled one at that because for all my efforts at investing in IPOs last year, I have mostly returned cheques to show. Getting handsome allotments to IPOs these days is a bit like attempting to lay your hands on a rare 78 rpm vinyl record. That explains why I will not exactly be brimming with enthusiasm when somebody, for the 79th time, screams in my ears: "There's an IPO boom happening." Perhaps. But there may be not much in it for me. That also explains my grudge (maybe laced with envy) against investment banks that rely on their old boys' network to get an issue oversubscribed.

If reports of Google's combo-IPO gameplan are true, that could possibly be the most perfect way to raise money. Book building can be used to set the price, and a separate tranche can be created for retail investors who need not participate in the price-setting process, but bid for shares in a uniform-price auction (and pay the price of the lowest-accepted bid). Whilst book-building will ensure that the promoters' goals are met (oversubscription, rising share price, etc), retail investors will also get a realistic chance to throw their hat into the ring. Until that happens, I am not going to fill any more of those forms.

-Brian Carvalho

"Indian companies need to invest in the US"

Frank Pallone Jr.: A true friend

For decades now, congressman Frank Pallone Jr. has been a friend of India. More recently, he's been instrumental in getting Indian pharma companies concessions in the US market. In India to attend the Pravasi Bhartiya Divas, Padma Bhusan-winner Pallone spoke to BT's Ashish Gupta. Excerpts:

You are a friend of India, but against offshoring by American companies.

Because I want different leaders and elected officials here to understand that this is a problem in the US. And one way to counteract it is to talk about the fact that there are export opportunities for US goods in India. Also, we need to encourage more Indian companies to invest in the US so that there is some trade coming the other way.

Companies are outsourcing just the same.

Corporations don't pay a lot of attention to us politicians. They do their own thing. It is up to us to make the point. They are going to go wherever the money is.

But you've helped Indian pharma companies, particularly Ranbaxy.

I am pushing for more generic because generics is a way of lowering drug costs. So, I am not trying to be partisan. Ranbaxy has been very smart in finding that niche.