There is also another angle to it, not exactly specific to India. A close watch at the Nasdaq would tell you that the earlier story of the Nasdaq index breaking out from the 2500 level to go beyond 4200 is a now history.The current scenario can never be the continuation of the earlier drive. The earlier momentum drive, which could with reason be labelled `plain spiralling', detached from any conscious relating to underlying value, has probably died out.

A review of the results at Amazon and to some extent at Yahoo has brought the speculators forcefully down to earth. This change in perception and stance has affected infotech stocks all over southeast Asia, and Indian stocks are no exception, not withstanding the fact that all the stocks are not exactly akin to Amazon or Yahoo in their business content or strategy. If any validation was needed, one saw it at the Infy counter at Nasdaq recently. It would again be important to build into this reckoning, the factor that at Infy, the investors and market players at the counter, most likely, have Indian connections.

There is reason to suspect that holdings may not possess truly a global representative shade in terms of stake holders. All this would lead the market player still confounded as to what is going to drive the market. In as much as the downside gap in the Sensex of July 24 has now been filled, there is hope for further recovery in the market. At the same time, it needs to be pointed out that Infosys has come up against a technical resistance at Rs 8,452; it remains to be seen that whether the large volume seen on Thursday provides the momentum needed to cross this barrier. On the face of it crossing seems likely. But if you remember the fact that in the recent past, FIIs had booked profit on Infosys, one would still keep his fingers crossed. That brings you back to the important question as to what could drive the market up.

It is in this scenario that any improvement to country's rating should help a lending hand in sustaining market buoyancy. The Government's move to strengthen the small scale sector as well as to bring in the law on fiscal discipline should add strength to the country's rating. The move on the small scale sector can indeed add strength to the economy. It is the small scale sector which has been responsible for a major chunk of exports. More capital incentives and technology inputs could definitely shore up this sector, which in turn would add to the strength of the economy. In due time, this could add to the market's attractiveness for foreign portfolio investors.

Primary markets
The sudden change in the secondary markets sentiments, post-budget, had put paid to the plans of many an IPO. For it's a fact that the primary markets are affected by the sentiments prevailing in the secondary markets. However, the Hughes telecom and TIPS bookbuilding issues are finally making their debut at the primary markets. Also, the much touted Pritish Nandy communication issue too slated to hit the markets soon. Their fate is being watched with a great deal of anxiety since, it might as well reflect on the signs of any revival in fortunes of the primary markets as a whole.

After the Sebi had done its bit by giving the media and entertainment issues, a major fillip by reducing the minimum issue to 10 per cent from the earlier 25 per cent, there was a glut of issue announcements. However, with the debacle at the markets, a majority of these planned issues seemed headed for a long hibernation given the sentiment at the markets.

The Sebi guidelines on the 90 per cent and the subsequent 100 per cent bookbuilding guidelines added to the anxiety. It must be recalled here that the Sebi board had approved of the 100 per cent book building issue way back in April. However, it has not been enforced due to the lack of clarity on the legal issues pertaining to the contravention of the Companies Act. This resulted in delays and confusion for the merchant bankers.

A look at the recent IPOs reveals that most of these stocks listed at a discount are presently quoting at a discount on their listing price at the BSE. Also, it would be interesting to note that the stock prices of the recent IPO's haven't fallen because of any fundamental problems with the company. Their fall could to a great extent be attributed to the setting of prices by the lead managers and the investment bankers in a manner that sent them too high in the first place. Bookbuilding procedure is fairer and transparent in the sense that the current demand for an issue is disclosed and prices are fixed in accordance with the demand and supply norms.

However, possibility of manipulations in pricing can not be ruled out. This is despite the stringent disclosure norms by Sebi.

Of the present issues, the Hughes Issue, despite all its merits, involves a high gestation period and analysts are apprehensive of any early returns from the stock. As for TIPS, the good financials notwithstanding, it is mainly a personality driven company. And hence the chargesheet on Ramesh Taurani, one of the promoters, in the Gulshan Kumar Murder case assumes added significance. Given the prevalent sentiments in the markets and the apprehensions surrounding these individual issues, it seems unlikely that their debuts will perk up the mood in the primary market.

KSESH (with contributions from Sachchidanand Shukla )