Sensex at 17,000

Written by Dhirendra Kumar | Updated: Sep 30 2007, 08:25am hrs
Another round number has come and gone. The BSE Sensex is past 17,000, at least for now. For many newspapers, the task of writing smart headlines was made a lot easier because Yuvraj Singh chose that very day to do his 6-6-6-6-6-6 thing. It was unfortunate for the headline-writers that Yuvraj revealed only a day later that his father celebrated the event (the 6s, not the 16,000) by firing six gunshots, in true Chandigarh style.

Having written about the National Stock Exchanges Nifty index last week, I couldnt help but reflect on how no one cares about the Niftys round numbers or big moves. I mean the NSE is actually spending advertising money to try and convince all of us that their index is the Stock of the Nation, but no one cares. I have a simple piece of advice which can help. In fact, this is the only thing that could help: make the Nifty number bigger than the Sensex. Im serious, sort of. All that the NSE has to do is rebase the Niftys starting point to 5,000 instead of 1,000 and they will find that they start getting all the attention they want. Which media person in his right mind would write a headline that says Nifty gains 186 points instead writes Sensex gains 653 points The bigger number will win, every single time. Unless the NSE unleashes a big multiplier, all this Stock of the Nation stuff is a waste. Of course, if the NSE actually does this, then the BSE will also respond and before we realise it, this mine-is-bigger-than-yours game will end up making the indices point levels look like phone numbers. No one ever said that getting publicity was easy.

Anyhow, the markets are said to be on their way up again. A number of analysts are competing to set up more and more aggressive time-frames for the Sensex reaching 20,000 and 25,000 etc. We are reminded of all the things we now know by heart. The basic strength of the India story has won through. The domestic growth story is far more important than any externalities. And so on. As always, it is a stretch to assign fundamental, long-term reasons to short-term moves. The markets move was triggered by the FII buying that followed on the heels of the lowering of interest rates by the Federal Reserve in the US. To my mind, the events of the last few weeks just underscore the fact that short-term moves have far more to do with money flows than fundamentals. Sure, one expects that in the long-term, the money flows will follow fundamentals but not in the short-term. The long-term good news is true and so are the short-term ups and downs but they dont have all that much to do with one another.

And that makes it clear to me that far more than at any earlier point in this five-year bull-run, its time for investors to completely focus on the long-term. As weve seen throughout this credit crunch crisis (and even earlier), short-term players are very nervous and will run away at every breath of bad news and rush back at every hint of good news. And since the worlds supply of both kinds of news is even more robust than normal, I am sure we are up for lots of ups and downs.

Its time for investors to completely focus on the long-term.

The author is CEO, Value Research