"I have plenty of dud stocks. (but) I have learnt from my mistakes" Dinesh Lakhani Investor

Dinesh Lakhani, 62, has been investing in equity for the past 30 years. He first took the plunge when multinational companies in India were forced to dilute their holdings in 1977. From thereon he moved into Indian blue-chips, and today Lakhani's portfolio is worth a king's ransom. But he's quick to remind you that not everything he touched turned to gold. "I have plenty of dud stocks, many of which were bought during the IPO (initial public offering) boom of 2000. I have learnt from my mistakes."

Lakhani's journey over the past 15 years at a broad level mirrors that of most investors on Dalal Street-retail or institutional. Virtually all the rallies-till the last four years-have been followed by crashes, many of them brutal in nature resulting in scores of investors losing their shirts, and more. Since December 1991 till date, the Sensex has jumped seven-folds to 13,400 from 1,909. However, these runs have neither been secular nor smooth. Barring the initial euphoria in the early 90s-once economic reforms were ushered in, and once foreign institutional investors (FIIs) were allowed to invest in India-the markets flattered to deceive right through till mid-2003, a period during which the benchmark Sensex wobbled in a 2,000-point range. It's been another story since then, with the 30-share index zooming from 3,000 to 14,000. In the last four years till December 15, 2006, FIIs have pumped in nearly $34 billion (Rs 1.53 lakh crore) into Indian equities, as against $15 billion (Rs 67,500 crore) in the 10 years from 1993 to 2002. Despite this huge surge in the index, the price-to-earning ratio (p-e) of the Sensex is at 23 times, as against 40 in 1993.

For the estimated 10 million investors in Indian equity, it's been a long, wild, often painful, and eventually fruitful, ride over the past decade-and-a-half. Pre-liberalisation-and a few years after it too-the Bombay Stock Exchange (BSE) was perceived to be a cosy coterie of brokers, and the exchange itself was infamously considered a casino to which only a privileged few were invited. But plenty has happened along the way to change all that. Says Gurunath Mudlapur, MD, Atherstone Institute of Research: "In the last 15 years, we have moved from a disorganised market to a regulated and controlled market. Introduction of newer products and emergence of global players have increased the width, depth and have also brought vibrancy into the market." "It's no more a market that can be de-stabilised by one person," adds Maneesh Taparia, Director, Techno Shares & Stocks.

Of course it wasn't always this way, and it's taken plenty of reforms to reach the relatively transparent stage the markets are at today. The biggest step forward was taken when the Securities & Exchange Board of India (SEBI) became operational in 1992 with the passing of SEBI Act. Till 1993, exchanges were largely left to regulate and supervise themselves. The birth of the National Stock Exchange (NSE) in 1994 went a long way in improving the non-transparent scenario. For one, NSE was not run by brokers-BSE was-and, for another, its own plans for screen-based trading persuaded BSE to abolish the earlier open-outcry system of trading on the exchange. A big advantage of the NSE's platform was it could be accessed nationwide. What's more, electronic trading paved the way for the formation of the National Securities Clearing Corporation and the National Securities Depository in 1996. The impact was tremendous. New players rushed in, as a result of which brokerage fees dropped from 2.5 per cent to less than 0.5 per cent. The stock exchanges and depositories become a duopoly between NSE and BSE, and NSDL and CDSL (the Central Depositories Securities Ltd, which came into existence in 1997). As the equity cult gained ground, new players-private and foreign-entered the asset management business, ending the monopoly of the Unit Trust of India.

"If greed takes over fear, you will lose heavily" Maneesh Taparia Director/ Techno Shares & Stocks

Doubtless, securities scandals have been an integral part of Indian markets-mercifully not so much in the recent past-and the late Harshad Mehta and Ketan Parekh fell from grace because of their ingenious, but alas illegal, routes to financing their trading binges. Yet, traders like Mehta were in many ways ahead of their time, and if one were to build a portfolio of stocks he recommended-on the basis of his pet replacement cost theory-and put a value to it on current prices, many of today's hotshots would pale in comparison.

Yet, the scams of yesterday have gone a long way in pushing through reforms, particularly at the BSE. For instance, the indigenous carry-forward system of badla, which lent itself to rampant price manipulation, was done away with, paving the way for the introduction of derivatives. More recently, the broker-club image of the BSE melted away with the corporatisation of the 133-old exchange.

Despite a chequered past, the BSE has played the part when it comes to the prime role of a stock exchange-offering an opportunity for entrepreneurs to finance their aspirations, and for small investors to participate in that growth. "For first-generation entrepreneurs, the stock market has been like an ideal institute to reflect the recognition of the risk and reward matrix. It's been the epicentre for growth, which helped us in funding our future growth," says Jignesh Shah, CMD, Financial Technologies. Avers S. Ramesh, COO, Kotak Investment Banking: "The market has always rewarded those who have built businesses."

"He saw the dawn on Dalal Street before few could" R. Jhunjhunwala CEO/Rare Enterprises	"The SEBI chief has cracked down on some big fish" M. Damodaran Chairman/ SEBI

"The market is never unkind to investors.

However, if your greed takes over fear then you lose heavily," says Taparia. Today, greed is rampant on The Street, and with all vital signs of the economy and corporate India in order, it certainly isn't frowned on. SEBI, with Chairman M. Damodaran at the helm, is pretty much on the ball. And the feel-good factor has well and truly permeated, with market players not hesitating to take very long-term calls. As Milind Karandikar, a Mumbai-based technical analyst, prophesises: "The strong underline in the economy and corporate performance will drive the Sensex in the coming 18-24 months to double the current levels; thereafter, the index will slow down for the next seven-to-eight years before rallying back to hit 1 lakh by 2050." Clearly greed is good, even if sometimes it appears too good to be true.