If somebody invested Rs 100 in a Sensex index fund on New Years Day, by May 30 he would have been bemoaning the loss of Rs 6.
If that money had been invested in a hot tech stock like Infosys, the loss would be more like Rs 45.
Those figures suggest that the bear market is very much alive and kicking. However, remember the old saw about lies, damned lies and statistics? The Sensex is a popular indicator of stock values but it's not infallible.
And, although the attention of every investor has been focussed on tech for the past five years, other sectors don't always move in the same direction.
The Sensex is an index of 30 of the largest stocks and indeed, this basket has done badly. ICE stocks have done even worse. But other stocks, meaning non-tech companies that aren't necessarily amongst the very largest listed, have had far better returns.
The BSE500 Index, which tracks the 500 biggest stocks listed on the Stock Exchange, Mumbai has risen by 4.75 per cent since January. Many individual stocks have done even better.
The accompanying chart shows the performance of some stars in comparison to the Sensex.
Are happy days here again? Maybe. There are obvious reasons why this will not turn into an instant bull run. But the trend of rising prices seems sustainable.
Let's list the reasons against a vertical rise. The biggest mitigating factor is political uncertainty. The election schedule over the next 18 months is a) going to retard the timetable for reforms, possibly derail them, b) nobody knows the composition of the next government.
This uncertainty is compounded globally by aggressively unpredictable US foreign policy and possible political uncertainty (US presidential elections are due in Nov 2004).
Moreover, the global economy is still in bad shape, after the biggest bubble in history. Global tech share price declines have been of the order of 70 per cent plus.
That affects Indian exports and impedes the flow of FDI and institutional investment. The IT-sector meltdown also affects sentiment in a major way. So many investors, have lost so much money that they've also lost the heart to invest more.
But India has a big domestic economy and the internal market generates enough demand to keep things bubbling even with these negatives. The 2003-04 Budget gives investors incentives to buy stocks.
Circa January-March 2003, many sectors are undergoing simultaneous cyclical revivals. One cyclical sector registering better results could be a flash-in-the-pan. But several unrelated sectors implies a genuine demand revival.
Cyclicals are tricky stocks. Pick the wrong time and you will be a major loser. Pick the right time and doubling and tripling is possible. Most of these sectors haven't featured in "Must-Buy" lists since 1996. So, share prices are very low and possess the potential to generate huge returns in the long-term.
Refer back to the chart. The companies in question have not simply beaten the Sensex. Each is a sector leader and thus, a fair representative of sector-performance.
Each has shown improved results and possesses better prospects. Other companies in the same sectors have similar performances. Each of these sectors could reward investors over the next few years.
Textiles: Arvind Mills has seen a major turnaround in fortune, partly as a function of better debt repayment schedules. But other textile companies such as Century, Hanil Era, Bombay Dyeing, Raymond have also seen better results and higher share prices.
Banks: The Securitisation Act of 2002 offers lenders a chance to recover bad loans. The increase in FII holding limits could attract more investments.
If interest rates stay low or fall, bank volumes and profits rise. Banks have been among the best performers this year. Given sensible equity buyback decisions, the bull run will continue.
Energy: This is partially a privatisation story. Since 1991, the market has lived in hope of complete price-decontrol and a sell-off in the refinery sector. This is more likely if the NDA turns insecure about re-election prospects and decides to take the money and run.
BPCL, HPCL et al are genuinely profitable companies and likely to substantially improve profitability. You have IPCL as a shining example of what is possible.
How about ONGC, Hind Oil Exploration and Indian Oil? While Dubya's in the White House or looking for re-election, these remain magnificent hedges.
Power equipment: Siemens and ABB Alsthom have moved to five-year highs. BHEL is part of the Navratna brigade. Essentially things are in such a mess in the power sector that reform will be forced inside the next couple of years. That can't hurt.
Auto ancillaries: If sales of two-wheelers and four-wheelers imcrease, can the component producers do badly? Unlike most auto manufacturers, component makers are often semi-monopolists -- sole suppliers of components.
Companies like Sundram Clayton, Auto Axles, Gabriel, Easun, Munjal Showa, Jai Bharat Maruti, Exide, Apollo Tyres etc have been in the limelight.
Sugar: This is the riskiest call. Sugar is not only a cyclical -- it has incredible levels of embedded political interference.
That's understandable; something like 70 Lok Sabha constituencies across five or six states are directly affected by the industry. So there's cross-party consensus for firm shackles.
This means massive annual price swings. Prices will stabilise if commodity futures trading becomes a reality.
Both exporters and liquor manufacturers form powerful lobbies for liberalisation. Investors are entering stocks like Bannari Aman, Balrampur, Dhampur, Shakti, etc on that premise.
There are many other sectors where stock pickers could generate decent returns, especially with the tax-breaks. Pharmaceuticals, FMCGs, shipping, even IT if the prices come down a bit more.
So long as buyers are patient, this seems an excellent opportunity to get in at the bottom of a long-term revival.