Expect the unexpected... that's the message of May 13, 2004. And it could pay stock market investors to listen. For its relevance may not quite be over yet, as India heads for its first ever Budget by a Congress-led coalition.

Meanwhile, investors are still recovering from the Left-led mid-May crashes; bse Sensex and nse Nifty witnessed their highest ever intra-day fall, with the former down over 800 points at one stage. Of course, the soaring oil prices that riled markets worldwide also played a role in the story of aftershocks that followed. And the coming in of a reformist top team-of Manmohan Singh and P. Chidambaram-has put a clear floor under the markets, even though they remain volatile. This is perhaps on account of the United Progressive Alliance (UPA) government's Common Minimum Programme (CMP), which was greeted with grimaces, by and large.

May Mayhem

In May, India's two major diversified indices, BSE Sensex and NSE Nifty, lost 15.8 and 17.4 per cent, respectively.

By sector, BSE PSU and BSE Bankex remained highly volatile, finally closing 28.5 and 25.3 per cent lower, respectively, for the month. These are reform-sensitive sectors. Among other sectoral indices, BSE Healthcare fell 9.8 per cent, BSE FMCG lost 9.8 per cent and BSE Consumer Goods plunged 21.1 per cent.

Diversified Equity Schemes

Diversified equity schemes all posted losses, with the average fall around 15 per cent. Exposure to technology and pharmaceuticals stocks offered a buffer of sorts to most mutual funds here. The portfolios of the two top performers, both from Taurus, are not available for analysis, but the third placed fund, UTI Mid Cap Fund, had scrips such as Arvind Mills, IPCA Laboratories and Aventis Pharma. The fourth placed Birla India Opportunities Fund minimised its losses on account of technology.

Sectoral Schemes: Of 33 schemes here, only two finished May positive. Tech funds were the least affected by the month's mayhem. The top performer has a major concentration of Infosys, Satyam, Wipro and HCL Tech, which make up over half the scheme. The second best performer, meanwhile, has gone heavy on just five tech stocks.

Balanced Funds

All posted losses here too. Sundaram Balanced Fund, which lost just 8.12 per cent and ended on top of the chart, had reduced its equity exposure from 65 per cent in March to 50 per cent in April (and further to 46 per cent by May end). Its equity portion is mainly invested in auto, pharma and tech sectors.

ELSS Schemes

All these funds suffered heavily in May, with an average fall in Net Asset Value (NAV) of around 15 per cent. HDFC Tax Plan 2000 and Birla Equity Fund, the top two on the performance rankings chart, got by on minimal exposure to oil and banking.

What Next?

The Budget, that's what, in July. Analysts and investors are holding their breath, even as you read this, on this one. Not in recent memory has there been so much apprehension and anticipation at the same time in a run-up to the Big B day.

That would be followed by the much-awaited IPO of TCS, India's top software exporter. Needless to say, a reformist budget with a coherent plan for sustained economic growth would cheer the markets. But then, that's not what most analysts are expecting, given the May experience. Investors are advised to think long-range in their approach to equities.

Adventure Capital

Raising startup funds isn't a big headache if you're sure of what you're doing.

By Amanpreet Singh

You are cordially invited to a Fund Raising Gala. Be privy to a business idea that will not let you be. Big returns for brave hearts.

Would you go? What if the host were you; know of people who would attend? Surely, India has enough adventurous investors around who'd gladly be part of some garage story that could become part of corporate lore, wouldn't you say?

An ideal entrepreneurial culture is one where it's money chasing ideas, not ideas chasing money. India may not be there yet, but people with small money and big ideas haven't exactly had to suffer. They've just had to use the power of their conviction.

Animation would spell big bucks, believed Shivkumar S., an IITian who started an animation shop, Axis.V Creatives, made a business plan, and went about convincing friends of its potential in 2002. He raised Rs 5 lakh by issuing Rs 10 equity shares that year, Rs 10 lakh the following year, and then Rs 15 lakh the next-at a Rs 10 premium per share. His promise: 20 per cent annual ROI to shareholders. Today, he's in dividend mode, and others are interested too. "A lot of people want to invest now," says Shivkumar, who cheerily claims to have billed Rs 1 crore this year already.

Meet Iyam Perumal, founder and Managing Director, CSE Computer Education. In 1986, back when 'venture' was never spoken in the same sentence as 'capital', he started imparting "e-literacy" with a one-computer office in Chennai. His friends were convinced of his dream, and four of them chipped in with a lakh each. Today, csc is a Rs 22-crore chain with 243 centres; Iyam's friends were well rewarded.

Similarly, computer engineer Ravi Sundaram raised Rs 2.5 lakh in equity from professionals and used up his savings of Rs 10 lakh to start Anugraha Quality Service in June 2003. He was sure of just two things: he didn't need big money, and wanted independence.

If it's any surprise, Ma Foi Management Consultants started small too. "Lata and I started with Rs 60,000 back in 1992," reminisces K. Pandia Rajan, who was ploughing in his Rs 10,000 salary while letting his wife Lata's Rs 7,000 run the house. The initial equity came by issuing 6,000 shares to family and friends. "One thing was clear that we would keep 51 per cent with ourselves, and work on a commitment of 20 per cent return to shareholders," says Rajan. The plan? Double turnover every year. With a CAGR of 78 per cent over the last 10 years, Ma Foi hasn't done too badly. "What inspired me was that the broad-based ownership model had worked abroad," he says, "and frankly I hadn't heard of VCs."

By 2000, Ma Foi had issued three bonus issues, and had an eclectic mix of 278 investors ranging from family and friends to match factory workers near Sivakasi, Usha Martin Group and CanBank Ventures. Ma Foi decided to sell out to Vedior in May 2004, and Rajan remains CEO. "The share that people had bought at Rs 1,000 was now worth Rs 33,000, and people did not want to sell," smiles Rajan.

So if there's an interesting invitation in the mailbox, don't dump it as spam. And if it's you who's sending out the mail, there might be people listening.