This refers to “Indices soar, as FIIs net buy $1bn in shares over 2 days” (October 2). Indian stock evaluations tend to be high and the trading, narrow and uni-dimensional. The shares of just the top 10 companies commanded nearly 45 per cent of the trade turnover last year. No single scrip normally enjoys more than 1 per cent of the turnover in the New York Stock Exchange. The Indian retail investor likes to enter stocks even at high ends of the spectrum, risking bumpy bull rides. Food inflation is at 16 per cent and rising, and key rates are hardening. Yet, even a plaid Ayodhya verdict or a grand Commonwealth Games opening made markets effusive, riding on sentiment. Foreign investors, who find most of the world markets dismal, are leveraging this notorious Indian psyche. Foreign funds transiting at unhealthy frequencies do not allow our markets to settle and find true depth. This makes the conservative long term-investor most vulnerable.
R Narayanan,Ghaziabad
