The reality is that we are certainly into a growth phase as indicated bymuch data that has flowed in from corporate sector, as also recounted in theRBI credit policy statement. Profit-booking should be treated as an outcome,not totally unexpected. By the same logic, investment should begin soonerthan later. Beyond profit-booking, there could also be some mischief intrying to bring the markets down by forceful with a view to entering againat much lower prices. How else do you explain funds selling HLL at analready low price, after a good quarterly results. Looking ahead, severalfactors should aid quick market recovery. The Credit Policy points tocontinuing and increased liquidity and credit flow to the commercial sector.

Other plus factors are the reduction in CRR ratio, the economy's ability toabsorb higher liquidity without undue inflatiionary impact and the sizeableincrease in credit to non-food sector. The total resource flow to thecommercial sector has gone up by around Rs 8000 crore. But there are darkspots. The high level of government's borrowing and poor fiscal managementhas imparted an inflexibility in government's scheme of borrowing. This, inturn, has not only made lower interest rates almost impossible, but couldalso adversely impact country's credit rating. With such a scenario, soonerthe corporates access external global borrowings, the better it would be forthe industry and the government. The silver lining could be that thedifficult situation could spur the government to be more prudent. Thegovernment's revenue deficit is worrying but needs more analysis. Thesoftware, jewellery and leather export sector would gain from the continuedpressure on the balance of payment situation. The government will be forcedto further encourage these industries. But clearly, it is time we movedbeyond competitive credit availability to the export sector, and tackled thebasic weakness of the sector. Portfolio managers should feel happy that theauthorised dealers have now been authorised to clear NRI portfolioinvestments.

The problem of sporadic shooting up of badla rates is likely to continue, inthe absence of any sign of let-up on the short term interest rates. However,the proposal to publish daily data on money market would prove good guidanceto operators.

There is much good news for money market mutual funds. The cheque-writingfacility now proposed alongside bringing them under Sebi purview forinvestor protection are welcome steps. Also, the initiatives taken withregard to retailing of government debt and its market development would be awelcome relief for safety conscious investors, seeking avenues outside thelimitations of the bank's saving and term rates. Bank analysts would nowhave to rework their forecasts, now that the YTM is going to be abandonedand redefinition of investments. For the investor, further easing of banklending norms to the infrastructure projects would give an added fillip tocement, steel, power and construction industry. The proposal to increaseflow of credit to housing sector is another welcome step. With such abackdrop can the markets be down for long?