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|December 30, 1999||
Markets set to flare up in New Year, say analysts
Our Special Correspondent in Bombay
Stock markets in India ended the millennium, so to say, on a buoyant note.
(The markets closed for the year today itself as a precautionary measure ahead of the anticipated Y2K problem. A special mock trading session is scheduled for January 2, 2000 which will enable the exchanges to test the Y2K preparedness of their computer systems. Normal trading will begin on January 3, if things are stable.)
The Bombay Stock Exchange's Sensitive Index closed above the 5,000 mark, turning the conventional wisdom that markets fall in December, on its head. In doing so, the Sensex proved that it is in sync with the world's leading financial markets' indices like the DJIA, Nasdaq index or the Tokyo Stock Exchange's Nikkei. Almost all of the leading indices have been on a high in the recent past.
So were all the fears of the Y2K bug playing havoc with bourses unfounded? Market analysts said only Time will offer the answer. The year-end spurt, fund managers and analysts said, is due to sustained publication of economic numbers which reinforce the economic revival story.
India continues to be in the priority markets lists of big funds. The number of FIIs registered with the Securities and Exchange Board of India has increased from 450 a year back to 492 as on date.
The software stocks, key drivers of the markets this year, are to India what automobile stocks were to Japan in the past. These are aiding the bull run, fund managers said.
The markets are set to reach new highs as this is just the beginning of a bull-run, they added.
Even at current levels, the Sensex is quoting at just about 20 times the price/earnings ratio. (The Nasdaq P/E ratio has been above 40 during 1999 on an average). "There is still ample scope for appreciation. The coming year will see the software scrips in the limelight as we are at the beginning of the fourth revolution (the Internet age)," a fund manager said.
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