Too Much Bull To Bear

This bear did appear in June, and his stockmarket compatriots showed their face in the arena in October, when the Sensex nosedived briefly by over 1,000 points. But only to recover as the bulls threw the bears again out of the ring. Elsewhere, other bulls were chanting typical Indian stories about the boomingBPO sector, the soaring software segment and the overpowering outsourcing openings. A political bull, commerce minister Kamal Nath, triumphantly announced that India and other developing nations had forced their powerful developed adversaries to buckle down at theWTO Hong Kong meet in December.

In other areas, the bulls vs bears theme kept repeating. While travel by road and rail became dearer as global crude prices reached a level of $70 per barrel—and experts predicted an even higher price of $100—air travel became cheaper with a few lucky ones managing to fly at a ridiculously low price of Re 1 (excluding airports tax). But tourism thrived, as both foreign and domestic tourists decided to fulfil their travel dreams and spent money like never before. Although we didn’t get to witness it closely, studies showed that the annual hike in Indian salaries were among the highest among emerging nations. 

Another bullish trend was the passion with which Indian firms clicked deals, both domestically and abroad. The year saw some of the biggest deals in India’s history—Vodafone buying into Bharti or Holcim into acc—as businessmen worked overnight to snap whatever was available, wherever and at whatever price. Even the oilPSUs went on the rampage to look for acquisitions—some succeeded, some failed. It just seemed a good season to sell, and the buyers had overflowing coffers. Gold prices reached a 25-year high!

Let’s now end on a bearish note. Despite the Rising India feeling, experts felt that the 21st century had spelt death for Indian farmers and that a number of welfare schemes aimed at the poor may not help them. Infrastructure was seen as the biggest bottleneck in bridging the gap between the poor and the rich. In fact, despite 14 years of reforms, black money had increased as the government battled to keep a check on it. Not to forget the Red Flags that reappeared to stall reforms in most areas, be itFDI in retail, reducing interest rates on pension funds or privatising PSUs. As we said, 2005 saw a combination of snorting bulls, but an equal number of scared as well as aggressive bears.