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Last Updated: Monday, 19 September 2005, 08:49 GMT 09:49 UK
Investors ride Indian stocks wave

By Monica Chadha
BBC News, Mumbai

Bombay Stock Exchange
"Sell" is a word not often used on Bombay's Wall St
Last year, Smita Patel lost 500,000 rupees ($11,400) of her personal savings in a day on the Indian stock market.

Since then, not only has she recouped her loss but is in profit to the tune of 250,000 rupees ($5,700) due to a share market surge that shows no sign of slowing down.

"I have never made money in the markets, from the time I started investing more than 10 years ago. This is the first time I have made any profits and now I am happy to say I am a gainer."

India's benchmark Bombay Stock Exchange (BSE) achieved a historic high last week when it crossed the 8,000 mark. Since then, the BSE sensitive index (Sensex) seems to rewrite history every day by scaling new heights.

Good times

The boom is attributed to a free flow of foreign and domestic funds in the Indian markets with everyone buying shares at high prices. Sell is not a word being used very often on Dalal Street - India's Wall Street.

Rajesh Jain
The Indian markets have performed and there has not been any regulatory hitch or any question on the integrity of the market.
Rajesh Jain,
director, Pranav Securities

Foreign fund investors and share brokers say this is testimony to a buoyant Indian economy and the country being looked upon as an emerging market with numerous opportunities.

Everyone wants to cash in on the good times, in India and abroad.

"India and China are the only two economies in Asia that are growing at such a rapid pace," says Nimesh Kampani, chairman of one of the biggest foreign investment institutions in India, JM Morgan Stanley.

"There is a huge domestic market in India and companies across the board are doing very well. Indian businessmen are being seen as smart entrepreneurs who will deliver. This has increased the confidence of foreign investors who are willing to put their money in these companies."

He adds: "India does not offer many foreign direct investment options like China and therefore buying shares of Indian companies on the BSE is the only way of joining in the action."

Transparency

Latest figures released by the Indian markets' regulatory authority, the Securities and Exchange Board of India, show that foreign investment in Indian stock markets from January 2005 until September was $8.09bn.

This is the highest foreign investment seen in Indian markets. The amount for the same period last year was $4.54bn.

Bombay Stock Exchange
Good times are to be had on the Bombay Stock Exchange

While the huge volume of foreign funds have aided the stock market boom, a rise in the number of domestic investors has also helped push the Sensex to dizzying heights.

Rajesh Jain is the director and chief executive of leading brokerage Pranav Securities. and says this is due to their faith in the Indian markets and the direction in which the country is headed.

"For two years continuously, the Indian markets have performed and there has not been any regulatory hitch or any question on the integrity of the market.

"The reforms push that the current government began almost a decade and a half ago has led to a greater acceptance of doing things the right way, in a more transparent manner that has led more and more people to feel safe about where they are investing."

Nimesh Rathod is an electrical engineer who runs his own manufacturing firm.

He says he previously had losses of 350,000 rupees (almost $8,000) but is now well into the black. However, he is still wary.

"I am mentally prepared for losing some money but at the same time, I know the trend is by and large good, the markets will not fall that much and I will not go back to square one like I did the last time."

For now, Dalal Street is on a roll.


SEE ALSO:
Whither social progress in India?
31 Aug 05 |  South Asia
South Asian economies gather pace
12 Aug 05 |  Business
New high for Indian share market
08 Sep 05 |  South Asia
India 'tops for Asian investment'
09 Jun 05 |  Business


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