Positive news coming from government quarters last week should gladden the hearts of traders. Sinha is now optimistic that the direct tax collection target of Rs 59,000 crore for 1999-2000 will be achieved. The tax base too is widening with the number of applicants for permanent account numbers (PAN) touching 1.6 crore, which is expected to go up to 2 crore.

The news on the FDI approvals for the January-March qaurter is encouraging. It is 25.5 per cent higher in dollar terms (33.3 per cent in rupee terms) at $2.6 billion, compared to $2 billion approved for the corresponding period in 1998. On government borrowings, Kelkar haspromised that the borrowings will be at a lower scale, responding to the hints by RBI. That should give much stability to the rupee and in turn encourage further FDI and FII portfolio flows.

For the corporates, restructuring will be the new mantra for survival and growth in the ever competitive market. In such a scenario, it is sweet music that Sinha has talked about the need to provide corporates with increasing incentives to go in for mergers and acquisitions with further tax incentives. Investors can look forward to dynamic corporates stepping up their drive to add new products and new capacities by taking over weak units. In fact, the beginning of such a move would also improve the stock prices of second line companies which are doing well but suffering from lack of image.

We have seen takeovers and acquistions taking place in the pharma industry. There is still tremendous scope for consolidation in a number of fields like the food industry (with Britannia reportedly looking at Parle), polyester (FIsconsidering a finance package in the light of improved prices and a narrower gap between capacities and demand), paints (the failed attempt on the part of ICI with Asian Paints), aluminium foil, cement, sugar and cables. Sterlite's plan to spin off its cable business from copper is another example of restructuring or demerger.

At the global level Hoechst AG and Rhone-Poulenc are planning to merge into a $21.8-billion share swap to become a stronger player in the $300 billion worldwide drug market. The merger would help costs and accelerate drug development.

Apart from pharmaceuticals, the merger and acquisition phenomenon has been marking much of the oil industry, globally. The latest is the possibility of a merger of Texaco with Chevron, the third largest US oil company. As foreign players eye Indian corporates in an attempt to take a stake in their equity, the complexion of such Indian companies is undergoing a quick change.

This is one reason why stock prices of IPCL, HPCL, BPCL and several othersare appreciating. Exxon is reportedly interested in buying out the Government's equity holding in HPCL. This comes on top of an investment interest by FIIs in these cyclical industries.

Three months copper is now settled between $1,570 and $1,610 a tonne. Currently, the price rules at $1,579/81. Sterlite Industries has raised cathode prices by Rs 1,500 per tonne to Rs 101,500 and continuous cast (CC) rod prices by Rs 1,500 per tonne to Rs 110,000 per tonne. These rises have come in the second half of May.

During the first half the price of CC rod was raised by Rs 8,000 and that of cathodes by Rs 8,500. There is a labour tussle on at the Highland Valley copper mine in British Columbia. In 1998, it produced 170,000 tonnes of copper at a cash cost of 68 cents a pound. There is a temporary shut down, and we need to wait to see if it will be reopened. Most probably it will be after a delay.

The tea industry will gain much by further pushing the initiatives in forming `Tea Association of South India', firstmooted in the meeting among Saarc nations in New Delhi on May 6-7. It is a pity that Saarc has never taken off as a regional trade group, when all over the world such groups are evolving quite fluently. The US benefits greatly by its grouping with the countries in the American continent. The European Union is a reality after toiling towards this objective for several years.

The Indian industry should feel the pinch of the formation of Comesa -- the common market for eastern and southern Africa -- comprising 20 countries. The first threat to Indian tea exports has already surfaced with Egypt reducing the import duty on Kenyan tea from 30 per cent to 3 per cent. For imports from India, the duty still remains at 30 per cent. Industry captains must take a stronger initiative, as basically the formation of this forum is non-governmental in nature. In fact, the latter should help rope in Pakistan, a nation that imports around 140 million kgs. Pakistan does not produce tea, but both Sri Lanka and India do. Weshould wait to see how the Indian tea industry copes with this opportunity as well as challenge.

On the domestic front, tea production in the country is reported to be 25 per cent lower. Tea prices have declined to Rs 64 a kg since January this year as against Rs 88 a kg during the same period last year. The government could resort to imports to prevent an onion-like crisis. Tea companies will have a challenging time trading between short supply, unpredictable tea prices and profit margins. Investors in tea scrips would do well to keep booking profits repeatedly at the top end.

Agriculture has been a bright spot during the year for the Indian economy. At the global level, the textile industry has reason to feel happy that the global cotton output is now forecast to be 3.5 per cent higher at 87 million bales (one bale is 480 pounds).

Cotton consumption is expected to rise to 86.5 million bales, which is 2 per cent higher over the current year's estimate. Hopefully, denim and other fabric consumption willrise over the globe. That should be sweet music to investors in Arvind and Century scrip.

But news on the solvent extraction industry front is not so good. Soyameal prices have dropped sharply from $250 a tonne in 1998-99 to $140 a tonne. Due to bumper crops in the US and Argentina, prices are expected to remain low for another 18 months. This should be good news for the animal feed, milk and poultry industries. The two-wheeler industry is seeing intensive competition. Hero Honda is basking in the prosperity of Punjab. TVS Suzuki is reportedly launching scaled down versions of TVS Spectra to tackle price resistance. Telco and Maruti are braving it into the new world.

The corporate scene has turned exciting, but that alone is no reason to drop one's guard when it comes to investing in stocks. It is important that signs of recovery fructify into a significant growth. But stock markets do not want to wait and are kicking themselves to a belief that this recovery will firm up. They rationalise that the higherstock prices are in recognition of this hope. At the psychological level, this is nothing but rationalising. Investors rationalised even at the peak of the Mehta bull run. Rationalising one's action is as old as the human being. You cannot fight it, can you?