Smart People: Manish Shah

SMART EYE/ COUNTDOWN 2005

Manish Shah

"Garland year." That is how Manish Shah, head of retail products and strategy at Motilal Oswal Securities, describes 2004. A new addition to the technical analysis jargon? Not quite. It simply means that the Sensex chart for the year resembles a garland, with two peaks at the start and end of the year and a mid-year bottom, thanks to Black Monday.

"The year has seen a tremendous appetite for good paper (IPOs)," says Shah. "People, including retail investors, have made big money this year."

Like many others in the market, Shah's expectations at the start of the year were vastly different from what it turned out to be.

"We were expecting a BJP government and the reform process to get a further boost," reminiscences Shah, adding that he expected the index to reach nothing less than 7,000 by year-end. "Then everything went wrong."

But even among the dark clouds Shah spotted a silver lining. "Market fundamentals were strong, even though they were showing weakness post- elections." The current bull run has him smiling again, and he says there is a positive change to the market dynamics this time.

"Markets have a lot of depth now. Nobody rules the show anymore, unlike in the past. Operators and speculators are mostly roaming the B1 and B2 segments, which means frontline stocks are relatively safe from any hanky panky," notes Shah.

So what are the calls which went right for him this year? "We were bullish on telecom and cement, especially Bharti Tele and Birla Corp, apart from mid-cap IT stocks like Geometric Software."

But on the negative side, "the banking sector proved an underperformer," says Shah. According to him, telecom will be a good defensive bet in 2005, while IT stocks look set for a correction.

So is there a downturn on the cards? "Even if there is a correction, it is unlikely to go below the 5,500 levels (Sensex)," clarifies Shah. "The classical indicators of a bull market have not yet been spotted."

In other words, you can rest assured that the Sensex will reach at least 6,500 in the near future. But Shah warns about the "same old story" repeating itself.

"People are likely to enter at high levels and then repent at leisure." So is there a way for ordinary mortals to make some money? "From here on you need specialised skills to make money out of the markets." Point taken.