O what can ail thee, “stock market”, alone and palely loitering? The sedge has withered from the lake and no birds sing. Having attained dizzy heights, you have fallen to the lowest depth. What a fall! Your bench - mark index, the sensex, was once hovering proudly at 20,000 and beyond. It was a sight for Gods to see, while it was an eyesore to many others. It was soaring like a kite on the high skies, egged on by favourable winds. Anyone who entered the market could be expected to reap windfall profits. He had to put in some money and wait for a short period, and lo! The money was doubled! What a miracle!

Bad days:
But those were the days! Good things do not last for ever. Even the Indian stock markets have to pass through bad days. Will they come through? Who knows? The sensex or the sensitive index of the Bombay Stock Exchange, which is an average of the prices of thirty leading company shares, was hovering between 15,000 and 17,000 some time ago. But the plunge continued. Come July and it tumbled and went on to close at 12,961 on July 1. For the first time in recent years the sensex fell below 13,000. Many felt that 13 is an inauspicious number and it spelt disaster.

Ok! Said they: What is past is past. Let us hope that the falling trend would be arrested at 8000. Let us consider this as the next support level. It is believed that public memory is short. But not that of the people who have burnt their fingers by putting their hard - earned money in the stock market. Many have not burnt just their fingers. Their entire wealth is burnt out! Some are on the verge of insolvency! “But whose fault is it”, ask the wise guys, “Deja vu! Did I not warn you?”

Armchair critics:
Who warned whom? In a volatile situation, and the resulting pandemonium, nothing could be heard. But the wise guys are good armchair critics. They say that history repeats itself. This is true even in the case of the share markets. Their memory goes back to the nineties of the last century. In the dying moments of the twentieth century, in the late nineties, the emerging markets of Asia, including India, had a fall. The so-called Asian Tigers were revelling in the thought that their prosperity would go on and on, as they had large foreign investments. But they were mostly short-term investments by the foreign institutions. They were mainly interested in making a quick buck and not in making these countries strong. They were, as they are today, fair-weather friends; and as soon as they sensed that there were signs of weakness in the markets, they withdrew their money and ran away like rats on a sinking ship!

But thank goodness, India escaped the disaster as it had not made its rupee fully convertible. The other countries had not taken this precaution. Conversion of their money into foreign currencies could not be prevented. These countries were silent and helpless witness of their own doom. The Asian tigers had become paper tigers!

Prophets of doom:
Our experts often talk as if they are prophets of doom. There was a Godman in the United States who said that God would come down to earth on a certain day and take them all away. His disciples waited, with bated breath, for the arrival of that fateful moment. That moment had come! And it quietly passed away! The disappointed disciples attempted to commit wholesale suicide! These soothsayers say that as long as oil prices stay at a high level, the equity market will stay low. It is true in one sense. But not wholly true. There are other forces working in the markets. The mental rating by the operators in the market, including those who indulge in speculation, the world economic situation, mass hysteria and such other factors are always working in the market. The political situation as well as the health of the economy of a particular country also largely count. Bulls and bears often capitalise the situation, exaggerate the trends and bring down or kick up share prices. They create a situation in which the investor hastily decides to sell away or buy shares in the volatile and uncertain market, thus inviting disaster.

Holders of global equity funds, who have had a stake in the Indian equity market, are eyeing the situation with much concern. They are not in favour of assessing the situation on the plus side. Those who often tilt the prices in the Indian markets with their operations, the foreign institutional investors, are selling their shares, thus forcing the prices down. When the situation is favourable to them they buy shares in large quantities and make the prices rise. But recently they are selling the shares frantically. This has made the shares tremble and hurry towards the rock-bottom.

There are certain other external factors working against the Indian markets. The market - related losses in the United States and Europe had their ill - effects on the large securities firms. Consequently, liquidity is being squeezed. These firms are selling their equity assets to make good their losses. The heat is on the Indian markets also.

Difficult phase:
The Indian economy is passing through a difficult phase as a result of the oil - price hike and the world food situation. The measures taken by the Government are not yielding positive results. The Government has passed on just 10 per cent of the increase in crude prices to the Indian consumer. This has spelt its deleterious effect on the economy, particularly the industrial sector.

Cost of inputs:
Many manufacturing firms rely very much on road transport. Their transportation cost has increased conspicuously. The costs of many inputs have gone up. The increase in the prices of raw materials such as iron ore has hit the industries hard. Their costs have increased enormously, pushing up the prices of products. There is a fear of cost-push inflation or stagflation. The demand tends to fall and the costs tend to rise, making it more and more difficult for supply and demand to meet at an equilibrium point. What is the plight of the investors in this situation? That is the crucial question. This is the right time for making fresh investments. Don't indulge in panic buying, when prices are rising steeply: Buy in times of panic, says an expert. You should not be panicky. Stay invested. Make wise selections, continue to invest in small installments. All the best to you.