The sensex turns

The bulls may come marching in
Ninad Dhirubhai Sheth
On the Richter scale, the victory of the Manmohan Singh lead UPA government, can only be described as super seismic. As if on cue, the stock market went ballistic, rising 2110.79 points and shattering the circuit in 60 seconds.
This is the fastest ever single day rise of the Bombay sensitive index, indeed it is the fastest single day rise anywhere in the world. Although it was all over in just a minute - it added a phenomenal 566,881 crore in investor wealth.
So will the party last of are there enough structural issues that will ensure that a bear grip stays on the stock market?
Says Vikas Seth, director of my money securities, an investment firm, “The rally is real, however for it to be sustainable, two factors will be crucial, the first is fiscal deficit. Even at these levels it is posing a threat to the system as it accentuates government borrowing and crowds out private investment. The other thing to keep an eye on is the appetite that the new government will have for disinvestment of government owned public sector companies. On a positive side, the stability of this government will give it confidence for a bold budget and that will in itself provide a boost to the markets.”
The disinvestment plan of this government, according to finance ministry sources, is likely to be aggressive. It will aim at generating over 100,000 crore from the markets. There are 26 profit making PSU’s that could be on the block over the next few years. Says a Mumbai based banker, “Bombay is certainly bullish, and there is a lot of momentum expected on the disinvestment front. If the budget comes out with some bold reforms, and if, as is expected, the monsoons are good we may be looking at a major rally on the stock markets this year.”
One concern is that in two days the BSE listed stocks price earnings ratio shot up from 16.61 on may 15 to 19.48 on may 20th giving it a distinct casino feel. Says Ajay Parmar, head of equity research, at Enkay securities, a brokerage in Bombay,“The PE ratio will come down. While the mood is bullish one needs to wait for sequential policy measures to have an impact on the ground. Till then it would be a mistake to go euphoric at the rally. Wait is still the watch word. “
The prediction from various stock broking houses is looking optimistic. There is a momentum in the market and some believe that the market could reach as high as 20,000 by December. The consensus looks like the sensex reaching 16,000 levels.
Just as India enters a new period of stability, so the markets look set for a new phase of bullish activity. The time it appears is right for investing, not withstanding that some doubts remain on the fiscal front. Get set for what looks like the beginning of a new bull run on the Sensex. For the retail investor however it is important to add a dash of rationality to the exuberance on display.

make indian wine cheaper

The proposal by the agricultural minister Sharad Pawar to make wine more easily available has merit. While he has gone a step too far in calling the drink an enriched food - the argument gives Maharasthra an opportunity to get comfortable with the idea of drinking. In case of Shared pawar of course well he has a few of his own breweries and is likely to market them with Mallayya so there is a personal interest in making Indian wine available.There are compelling economic, cultural and health grounds for making wine far more easily accessible and at lesser cost. The case for the economic is obvious. India is one of the world’s largest producers of grapes. Much of this is wasted since the agro processing opportunities are lost given that the high taxation on wine makes their production uncompetitive. What is more, tariffs on foreign wine has come down over the last three years in keeping with GATT commitment making Indian wine even less comparative. Thus allowing greater access to wine at less will ensure that both the farmer and the wine yard owner gains. There is also endless scope in Wine tourism currently in its infancy which will no doubt get a boost with cheaper wine availability.The social case for cheaper wine is even stronger. The figures on wine consumption clearly state that India has in proactive left the Mahatma’s prohibition legacy far behind. Across strata social drinking is a reality. Wine drinking it can be argued is far less harmful then drinking sprites which have an alcohol content in the region of 50% and more. By making wine and indeed beer cheaper you crate an economic incentive that discourages the consummation of sprits.