Old economy stocks (pooh-poohed by market gurus) have caught the fancy of speculators, who have also focused on Visual Soft Technology and Aftek Infosys. The common factor in the targeted old and new economy stocks is that the controlling interests hold less than 51 per cent equity in the threatened companies. This point has been underscored by Rahul Bajaj.

The controlling interests have cried foul, and called upon SEBI to strictly enforce the take-over code. The appeal has gone to institutional investors (UTI, LIC, the term lending institutions) to use their voting power in support of existing managements. Regulations apart, so much depends on the assessment of institutional investors. Do controlling interests necessarily merit support? Are the predators headed for asset-stripping? The speculators have bought cheap; they might sell to existing controlling interests, at a high price, to make a pile. In that event, open buying from the market (to complete take-overs) will be thwarted. The run-of-the mill shareholder will be left with lemons. The small investor was left high and dry when Tatas sold their stake in ACC to a major cement corporate. Big players make big money, cock a snook at SEBI, and by-pass institutional investors, including the mutual funds!

Shares are no longer prized for dividend. A 60 per cent dividend on a ten-rupee share priced in the market at Rs 350 yields peanuts. The name of the game is fluctuations: buy when the price is low, and sell when it is high. But what drives prices up and down? Why did VSNL shares, issued at a premium of Rs 740, rise to Rs 3200 only to languish around Rs 750? Defying fundamentals, bears hammer down prices, turn into bulls and set prices soaring for the big kill.

Equity is a game for the money bags. So be it. The small investor should, say the wise, take to mutual funds (MFs). But are MFs a match for the speculators? MFs dedicated to new economy, to FMCG and to pharma stocks are in the doldrums. Investment in MFs, it is claimed, pay in the medium-long run. But with speculators on the rampage, can MFs deliver? It is difficult to ignore the spot Unit '64 is in.

Policy emphasises short run reward (seen in the pattern of interest on bank deposits). Why then ask the investor to look at prospective (uncertain) gains in the medium term? A related issue is, should banks be prodded to invest even a small proportion of their resources in shares? When bears hammer, bank investments in shares or in MFs will call for heavy NPA provisioning. SEBI nods. So does the Reserve Bank.