Backbone Of The Indian Stock Market example essay topic

YEAR 2002 AT A GLANCE: INDIAN HEADLINES: Disinvestment drama reigns supreme The privatization story ruled the roost this year, as the Government went from sublime to the ridiculous in implementing its most hyped and promising reform drive. The year began with mixed feelings on the Government's ability to push through tough economic measures, including the stake sale in PSUs. But to everyone's surprise the Government got its act together and sold off strategic stakes in oil marketing firm IBP and telecom giant VSNL to Indian oil and the Tata respectively. Not only that, it also announced disinvestment plan for oil refiners HPCL and BPCL, petrochemicals major IPCL, car giant Maruti, shipping liner Shipping Corporation of India, aluminium major NALCO, Engineers India and Balmer Lawrie. The Stock markets rallied following the privatization of IBP and VSNL, and expectations for more such decisions in future soared after the disinvestment in Maruti and IPCL. But the Indo-Pak border tension ensured that there was no announcement on other proposals for disinvestment for at least two to three months.

In fact, it was the Indo-Pak tension that led certain members of the NDA to oppose strategic sale in oil PSUs HPCL and BPCL. This encouraged the anti-privatization lobby to regroup against the disinvestment programme. The infighting within the Government on the issue of stake sale in HPCL and BPCL meant that no Cabinet meeting on disinvestment was convened after September 7th. Besides HPCL and BPCL, the privatization of others such as Shipping Corporation, NALCO, Engineers India and Balmer Lawrie also came to a grinding halt.

As a result, Government said it would not be able to meet its Rs 120 bn target for the current fiscal and that NALCO privatization would not be completed this year. The Disinvestment Minister also came under fire for the sale and re-sale of Centaur Hotel in Mumbai with parties accusing the Government of selling the country in the name of Disinvestment. The markets reacted negatively and as did the industry and international credit rating agencies. The Government received a lot of flake for succumbing to political pressures and delaying crucial decisions such as disinvestment.

Finally, the Prime Minister and his deputy managed to broker a compromise formula on the disinvestment of HPCL and BPCL. According to the new arrangement, HPCL would be sold through a strategic route while a public float has been preferred for BPCL. As of now, there is still no clarity on the time frame on the disinvestment programme, but let's hope that 2003 would not see Government giving precedence to political considerations over economics. Temple terror rocks India Last year, it were the symbols of India's democracy, the J&K Assembly and the Parliament, that became soft targets for terrorists seeking to wreck havoc across the country. This year was no different in terms of the intensity of the terrorist activities in the country.

But the targets certainly changed from democratic institutions to places of worship. Well-known temples such the Akshardham Temple in Gandhinagar and Raghunath Temple in Jammu were targeted by terrorists this year. In fact, the 200 years old Raghunath Temple was attacked twice by the terrorists in 2002. Hundreds of devotees were inside the temples when the attack took place, indicating that they were planned well in advance. Around 40 people, including security personnel, innocent civilians and terrorists were killed in these incidents. It seemed that the terrorists were seeking a revenge of the post Godhra carnage in Gujarat in which several people from the minority community were killed.

Indians were left shell-shocked as armed militant stormed the famous temples and rained bullets on innocent devotees. The attacks evoked a feeling of shock, anger and outrage among the citizens and prompted the Government to put other important places of worship on high alert. The attacks highlight the growing insecurity at public places across the country be it an airport, a railway station or a bus or a place of worship. Although it is very difficult to prevent such fedayeen attacks, one can only hope that authorities would be much more vigilant and alert when it comes to handling terrorism within the country. Gujarat... Godhra, communal riots and finally elections Besides Jammu & Kashmir, if any state in the country was in news, for all the wrong reasons, almost throughout 2002, it was Gujarat.

The state, which seen so much destruction, both natural and man-made, in the past several years, once again had a year it would like to forget pretty soon. Only, this time the disaster that wrecked havoc in Gujarat was of its own making. The state witnessed the worst communal riots in the country in more than a decade in the aftermath of the Godhra carnage. Over a thousand people were killed during the communal violence, which not only hit the economy, already suffering from previous disasters, but also destroyed the secular fabric of India.

The BJP Government, led by former RSS man Narendra Modi came under attack from various quarters for its (mis) handling of the post Godhra situation and failure to restore peace, harmony and stability. To take advantage of the communal frenzy, the Modi Government dissolved the assembly and called for fresh election. But the Election Commission stepped in, saying the ground situation was not ideal for holding election in the state. The EC and the Modi Government were locked in a tussle over when to hold election in the strife torn state. To take on the might of Modi, the Congress chose former RSS member Shankar Singh Vag hela. The BJP held a series of so-called Gaurav Yatra's, which again kicked up a fresh controversy, to drive home the advantage of post Godhra violence.

Finally, elections were held in December. The BJP romped home with a comfortable majority while the Congress bit the dust. The much-needed victory for the BJP gave a new lease of life to the party who had suffered many electoral defeats in the past. While for the Congress, it was time for some introspection as it also braces itself for forthcoming assembly elections in many states this year and of course, the General Elections of 2004. Indo-Pak tension Barely had the anger of attack on parliament subsided, came another ruthless assault by terrorists in Jammu & Kashmir.

Thirty-four persons, many of them innocent civilians, including children, were killed in a savage suicide attack by three terrorists at Kaluchak near Jammu on May 14, 2002. Tempers between the two nuclear-powered neighbors flared up yet again as New Delhi blamed Islamabad for fomenting terrorism in Jammu & Kashmir. As usual, Pakistan condemned the violence and denied any connection with the attack. Fearing that a rise in Indo-Pak tension could affect its war on terrorism in Afghanistan, Washington pulled out all stops to lower the tension between the two old rivals.

But not satisfied with Islamabad's efforts and under pressure from its Hindu extremist groups, New Delhi accused Washington of not doing enough to force Pakistan to take action against fundamentalist groups within Pakistan. Close to a million troops from both sides were already stationed along the tensed border following the attack on Parliament in December 2001. But, the threat of a war between the two South Asian neighbors rapidly escalated following the Kaluchak attack. India expelled Pakistan's High Commissioner to India and announced that India's paramilitary border forces and coast guard would be placed under direct military command. Even as senior American and British diplomats attempted to defuse the tension between India and Pakistan, travel advisories were issued by many western countries against visiting the sub-continent. Finally, after several rounds of diplomatic offensive from the US and the UK, both countries agreed to withdraw troops from the 2,000-km long border.

India also lifted the ban on the use of air space by Pakistani airlines. Travel advisories by western nations were also lifted as tension between the two nuclear-powered nations started receding. But the core issue of Jammu & Kashmir is still to be resolved as both sides refuse to give up their respective stand. While Pakistan says it is ready to talk peace with India, the latter continues to insist on a complete halt to cross-border terrorism.

L&T takeover battle The Aditya Birla Group's plan to become a major player in the cement industry suffered a set back after its open offer for L&T was halted by SEBI. The stock market regulator accused Grasim Industries of violating its takeover regulations. The capital market watchdog also accused Grasim of taking management control after acquiring Reliance's 10.6% stake in L&T. Grasim denied management control and moved the Securities Appellate Tribunal against the SEBI order. The SAT refused to grant an interim relief to stay SEBI's order stalling Grasim's open offer for L&T, which was scheduled to begin on December 9. SEBI also directed Grasim not to buy any shares of L&T through the open market route until further notice.

The directive would be in place until the market regulator completed its ongoing probe into the alleged violations of takeover code by Grasim. In the meantime, L&T revived its plan of de-merging its cement business despite opposition from Grasim, which proposed its own plan for the hive off. L&T said it was considering a proposal by UK-based equity fund CDC Capital for acquiring around 7% in its cement unit. But a concerted effort by the Aditya Birla Group managed to force L&T to postpone its board meeting where it was supposed to take a final decision on CDC's proposal.

Now it remains to be seen if the Birla manage to wrest control of L&T in the face of stiff opposition from SEBI Sensex smiles, stagnates & swings The Year 2002 was a topsy-turvy year for the BSE Sensex. The year got off to a positive start and is ending on a positive note. The middle period during the year was marred by several negative developments, sending the Sensex to a 52-week low of 2828 by the end of October. The disinvestment of VSNL and IBP lifted market sentiment ahead of the Union Budget.

However, spirits on Dalal Street sagged when Finance Minister Yash want Sinha failed to live up to market expectations. What followed was communal riots in Gujarat. Then came the Kaluchak attack in Kashmir, which led to escalation of tension between India and Pakistan. The situation remained tense for several months before international intervention managed to convince both nations to withdraw troops from the borders.

Besides the Indo-Pak tension, the market was also worried about the worst drought in a decade and its impact on the economy. A slew of corporate scandals in the US, continuing tension between Israel and Palestine, firm global oil prices and fear of war between America and Iraq were some of the global factors that cast their cloud on Dalal Street during 2002. But what hit the market the most was Government's decision to postpone a decision on the disinvestment of HPCL and BPCL by three months. The thee-month moratorium on disinvestment raised serious questions about the Government's commitment towards economic reforms. Finally, the long-standing impasse ended with a compromise formula, which envisages strategic sale for HPCL and a public offer for BPCL. The move managed to breathe fresh life into the market, which touched a six-month high after the Government announced the revival of PSU disinvestment.

Among the other factors that boosted Dalal Street included SEBI's decision to allow the expansion of the derivatives segment, renewed FII buying, the passage of the Securitization Bill and recovery in the US market. All these factors combined to lift the Sensex by 2.8% or 91 points to close the year at 3353. January 2002: The Government pushed ahead with disinvestment and managed to sell 25% stake in VSNL to Tata group for Rs 14.39 bn at Rs 202 per share. February 2002: The PSU disinvestment was the main story in the capital market.

The world was hoping the Indian PSU disinvestment would gain new heights. The government sold PSU refinery IBP to IOC on February '02. March 2002: The Godhra incident took its toll as Gujarat violence mounted. This was a major set back for the Indian Economy.

As a result, the Sensex crashed by over 12% from a 52-week high of 3758 on Feb 27. April 2002: The Government took another positive step by dismantling APM. The deregulation of oil sector is considered to be a big achievement by the Government. May 2002: A terrorist attack in Kashmir killing over 30 people saw tensions between India and Pakistan mounting. The Sensex crashed by 10% (350 points) from 3478 on 9 May to 3125 to touch a 6-month low on 31 May.

June 2002: The Sensex recovered by nearly 200 points on heavy buying in PSU stocks after the Government privatized IPCL. The Government sold 26% stake to Reliance at Rs 231 per share for Rs 14.19 bn. IPCL sell off was seen as another big step by the Government in pushing economic reforms. July-Aug 2002: The delay in monsoon sent the Sensex crashing by 300 points below the 3000 mark. The Sensex was drastically hammered and all round selling pressure was seen. Moreover, the world markets also tumbled on nagging worries about the state of the US economy and possible military conflict between America and Iraq.

The Enron and Xerox accounting frauds sent the Nasdaq, Dow and S&P to 6-year lows. September 2002 - The market continued to falter as Government failed to keep its promise on disinvestment. A strong wave of anti-disinvestment protests had a negative impact on the market. Moreover, S&P downgraded India's local currency sovereign ratings citing concerns about worsening fiscal situation and rising internal debt. As a result, the Sensex lost 100 points from 3037 to 2930 points. October 2002: This month again turned out to be bad for the stock market.

Poor quarterly results by companies like HLL, Wipro, Polaris, Hughes, Grasim, ACC, Dr Reddy, MTNL and Hindalco slammed the market. As a result, there was massive outflow of institutional investment from the stock markets. FIIs were net sellers in September to the tune of Rs 7.8 bn. The Sensex lost 85 points to touch a 52-week low of 2834.

November 2002: This was the best month for the stock market in 2002. The Sensex shot up by over 9% (280 points) to touch a four-month high of 3245. There was all round buying in the market. A slew of positive developments took place during the month that sent stocks soaring again. Among the factors that were instrumental in the sharp increase in stock prices were the passage of the Securitization Bill, Reliance's huge gas find, disinvestment hope, renewed buying by the FIIs, Iraq accepting UN resolution on arms inspection and SEBI allowing the expansion of the derivatives segment. As a result, the Sensex rose for eight consecutive weeks.

Banking stocks were the biggest gainers, buoyed by the passage of the Securitization Bill. SBI and Bank of Baroda touched 52-week highs. Moreover, Reliance, Infosys, Satyam and Wipro also posted handsome gains. December 2002. Although the strong gains of November started to taper off, the Sensex still managed to gain 100 points to cross the 3300 mark and touch a six-month high of 3371. The Government got its act together and buried internal differences on the issue of disinvestment.

The Government announced strategic sale for HPCL and a public offer for BPCL. This led to aggressive buying in PSU stocks like HPCL, BPCL, BE ML, Nalco and Engineers India. Market turnover crossed Rs 50 bn. NSE Turnover touched a 52-week high and BSE a two-month high.

Moreover, turnover in the derivatives market touched an all-time high of nearly Rs 38 bn. Moreover, the Government passed the CAS Bill, which boosted media stocks such as Hinduja TMT and Zee. Another significant development was the BJP winning the Gujarat Assembly election. As a result, Gujarat Government stocks like GSFC, GMD C, Surat Electricity and Gujarat Power rallied smartly. However, technology stocks were weak due to nagging fears about an impending US attack on Iraq.

Delay in Disinvestment... effect on capital markets On September 7, 2002 the Cabinet committee reached a deadlock on disinvestment and postponed a decision on disinvesting the oil majors - HPCL & BPCL by 3 months. That decision triggered a virtual meltdown in the equity prices of PSUs and even the bell-weather Sensex withered by nearly 200 points. For the next month investors were subjected to a prime time soap opera on the news channels as Ministers of all hues and colours debated the issue. The Prime Minister reiterated his commitment to the disinvestment process and some Ministers who were earlier arguing against the process appear to have relaxed their stance, leading to a sharp bounce-back in the values of several PSU stocks. The unambiguously negative reaction of the market to the news of the delay on Disinvestment and its joyous response in the first trading session post the PM's announcement, should leave the policy makers in no doubt as to the views of investors in the Indian equity markets on this issue. Disinvestment holds the potential of unlocking value in several PSU companies.

It should therefore come as no surprise that investors are all in favour of Disinvestment. But more importantly, we must not forget that Disinvestment through the strategic route, offers the potential of the highest prices for the government's holdings in these companies. For a fund-strapped government, which is dealing with the pressure of a combined state and central fiscal deficit of more than 10%, asset sales are the only way out. The fiscal deficit eats away at the government's ability to invest in much-needed infrastructure and support social sectors such as education & healthcare. The Catch 22 that faces our policy makers is that on the one hand they need to find the money to invest in infrastructure and social sectors, but they find themselves unable to do so due to a large fiscal deficit. They need look no further than the Indian private sector to see how companies have responded when faced with a similar crisis - the need to invest in their business, but a lack of access to funding - debt or equity.

They have responded by selling their non-core assets and investing in what they believed to be their core businesses. From the government's perspective therefore, it should, if at all, retain control only over such businesses where it perceives a strategic or security threat. Unfortunately those opposed to disinvestment have used the bogey of national security to argue against privatization of almost every PSU in sight. Given that the government intends to continue with its control of ONGC, IOC, Oil India and Gail it is hard to see how disinvesting HPCL and BPCL can in some way compromise the security of the country.

If we are to significantly raise the growth of the economy from its recent band of 5-6% then it will require significant investment by the government and by the private sector. Disinvestment offers the best way for the government to raise resources without worsening its fiscal deficit and perhaps at some point it will also enable the government to start paying down its outstanding debt. The negative fallout of a delay in disinvestment cannot be over emphasized. Not only will this place further strain on the government's finances, but it also depresses the capital markets, which have been anything but buoyant in recent times.

Our economy has been stuck in a narrow groove for some time now and as a result, growth is below the rates required to reduce unemployment and increase the level of people above the poverty threshold. The economy is capable of growing much faster than its present rate, but for that significant investment will have to be made. Further, the very fact that we are growing below our potential has resulted in a sluggish and trying environment for industry. Faced with a global slowdown it is all the more imperative that we do what we can to revive the domestic economy and disinvestment offers the potential of enabling the government to raise the resources required for growth. Telecom... new initiatives spur growth The Indian Telecom Sector has come of age.

The policy focus during the past one year has been on providing affordable countrywide connectivity with particular emphasis on value added customer services. The Indian consumer has been labeled as the 'King' with the wide range of choices available to him in both cellular and basic services. Competition is growing with level playing field conditions now available to multi operators in the new environment. Appropriate policy initiatives have acted as a catalyst in increasing competition in all the core telecom segments.

As a consequence, the ongoing telecom revolution has not been confined to urban India only. Rural India also bears a deep imprint of the current telecom 'magic' with the rural consumer learning to use tools of Telecom and IT for his betterment and empowerment. Rural Telephony The Village Public Telephone programme has given a new vision for the growth of rural telephony in the country. The highest ever Village Public Telephones, about 1 lakh in number were added in one year covering over 501,790 villages. About 25,336 rural exchanges have been made operational on optical fibre. Wireless in Local Loop (WLL) is being used to facilitate faster roll out in rural areas.

In order to provide qualitative connectivity, the second phase of the VAT will focus on the use of data access and management through the use of fax machines. In a major initiative to ensure that the benefits of the ongoing Telecom Revolution is made available to every citizen of rural India, the Prime Minister launched a Pilot Project - the 'Grameen Sanchar Sewak's scheme. This pilot project has been conceptualized to provide accessibility of public telephone to the rural population at their very doorstep by using the latest Wireless in Local Loop. Initially, this pilot project would cover about 8,000 villages in 21 Telecom Circles in the country engaging the services of 1800 Grameen Dak Sewa ks who will carry the Wireless based telephone in his area of operation and make available instant telephone communication facility to the villagers while delivering their letters. Another key initiative to promote Rural Telephony came with the establishment of Universal Service Obligation (USO) and the administration of the Universal Service Fund during the year. The Universal Service Support Policy came into effect from 1st April, 2002 after consideration of TRAI recommendations in this regard.

The guidelines for implementation were issued in March, 2002. An Administrator of the Universal Service Fund was appointed on 1st June, 2002. Reduction in tariffs The year saw a massive reduction in National Long Distance and International Long Distance tariffs. There was a reduction up to 62.5% in the National Long Distance tariffs from a maximum of Rs 24 per minute to Rs 9 per minute, the highest ever decrease in tariff.

The reduction in the International Long Distance tariffs has been by nearly 50% from Rs 48 per minute to Rs 24 per minute. The basic rental for Limited Mobile telephony has been reduced by more than half from Rs 450 per month to Rs 200 per month. There has been an unprecedented growth in the spread of the Telephone Exchanges, which have grown to 35,377. There has also been a growth of 25% in terms of telephone connections achieved during the current year.

India's tele-density, which has trebled in the last three years currently stands at 4.5% against the target of 7% by 2005 and 15% by 2010. Public Call Offices (PCOs) which stood at 4.2 lakhs on 31st March, 1998 have increased to 11.5 lakhs in 2002. Cellular mobile service The Cellular Mobile Telephone Service today, is poised to become a part and parcel of each and every household. The service has become affordable as a result of steep fall in tariff. There has been an exponential growth of subscribers and intensification of competition between operators in the private sector and those representing Government. According to the Cellular Operators Authority of India (COA I), on 1st April, 2001, the total cellular subscribers stood at 3,577,095 which increased to 6,431,520 on 1st April, 2002 and subsequently increased to 9,730,543 on 30th November, 2002.

Bharat Sanchar Nigam Limited launched its cellular service - 'CellOne' to cover 850 cities across the country by the end of this year and would cover all District Centres by 1st April, 2003. BSNL also launched the brand name for its pre-paid cellular service 'Ex-Cell' and Internet Telephony service 'WebFone'. All these developments have augured well for the Industry as it has led to improvement in quality and spread of the network. Plans are afoot to start mobile telephone services in Jammu and other parts of Kashmir very soon.

The Cabinet Committee on Security also lifted the restriction on the use of Wireless Technology in the entire North-Eastern region in an effort to usher the telecom revolution in the region. This move has been viewed positively as due to the difficult terrain of the region, communication through WLL technology would ensure connectivity to every village in the region. Disinvestment of PSUs The Government sold its 25% equity with management control in Vides h Sanchar Nigam Limited to the Tata Group for a total consideration of Rs 14.39 bn. The Government also offloaded 74% equity in HTL Ltd. to HPCL for a total consideration of Rs 550 mn. Technological innovation Technology has also proved the driving force behind the ongoing telecom revolution. It is the compression and digitisation techniques as well as broad band access provided by optical fibre, which has accelerated the opening of the telecom sector to competition whereby market forces are now determining the nature of the multi operator environment.

National information infrastructure has been built by laying 53,000 KM optic fibre cables, which provide countrywide linkages through 183 major cities. Around 1 lakh route km of optic fibre network has been added. Due to the technological innovation in creating world class infrastructure, India today, has become a preferred destination for Call Centres. The process for registering Call Centres has been simplified making India the preferred source for undertaking IT enabled activities. This has spurred growth by creating job opportunities in Call Centres whereby over 1 lakh new jobs have been created. A scheme for setting up of Community Information Centres (CICs) is also in vogue at 487 block headquarters in the seven north eastern States and Sikkim for promoting application of Information Technology for accelerating socio-economic development of the region.

Allowing Internet Telephony has created new avenues, which have enabled communications from the PC to telephone abroad and from PC to PC anywhere in the country. With a view to facilitate customers, Government announced 50% reduction in night-time access charges of internet. This measure was broadly to promote internet / computer awareness. Total number of Internet Service Providers who have been permitted to offer Internet Telephony Services from 1st April, 2002 are 93.

Another 24 ISPs have been given provisional clearance for commissioning of International Gateways for Internet using satellite medium till November, 2002. During the year, the Government also de-licensed Indoor Wireless LAN in 2.4 GHz to boost the IT sector through wireless connectivity for computers and internet services for their use in buildings and campuses. Fiscal incentives India attracts a large amount of Foreign Direct Investment (FDI) in the telecom sector. The total FDI inflow till date in the sector has been to the tune of Rs 95.58 bn. The last two years have accounted for Rs 50.48 bn of the total FDI inflow in telecom. The sectors where maximum FDI has come through includes Cellular Mobile Services, Manufacturing and Consultancy, Basic telephone services, E-mail services and VSAT services.

FDI up to 100% subject to certain conditions is permitted in the following areas in telecom sector: . ISPs not providing gateways (both for satellite and submarine cables). Infrastructure providers providing dark fibre (IP Category I). Electronic Mail, Voice Mail and Telecom manufacturing sector.

FDI up to 74% has been permitted in respect of the following areas in telecom sector: . ISPs providing gateways (both for satellite and submarine cables). End to end bandwidth and Radio Paging Service. Key fiscal incentives related to the sector were announced during the course of the year. These included: .

Telecom service operators to pay a reduced uniform Sales Tax of 4%. Reduction in Customs Duty on cellular phones from 26.67% to 14.4%. Telecom services companies allowed the benefit of carry forward of losses on merger. Under Section 72 A of the Income Tax Act. Basic telephone including WLL exempted from 1/6 scheme of Income Tax and E HTP Scheme modified to encourage telecom / IT manufacturing sector. Today, the country's telecom network, including mobile and basic services, is one of the largest growing networks in the world.

India offers world class communication infrastructure suited to both domestic and external clients. Telephone lines added to the basic services network over the last 5 years have grown one and a half times as compared to the preceding five decades. The current initiatives in the Telecom sector have created the environment to position telecom growth into the next orbit of growth. The customer across the length and breadth of the country is bound to reap benefits of the customisation of services and products in the sector.

Sensex set to cross 5000 mark While global markets, especially the US have come crashing in 2002, Dalal Street ended the year with gains. During the year, the Sensex crashed to a 52-low of 2828 before hitting a 52-high of 3758. Finally, the Sensex climbed by over 3.5% (115 points) to close the year at 3377. The year was extremely better than the previous year. Technology, banking, steel, auto and PSU stocks were the gainers among the Sensex stocks. On the other hand, FMCG, cement and media stocks were the major losers in the Sensex.

This year, Tisco closed at an 18-month high. HPCL closed at an 8-month high while Ranbaxy ended at nearly a 3-year high. Among the Sensex stocks, PSU refinery major - HPCL was the biggest gainer in the Sensex. The scrip shot up by over 100% to close at an 8-month high of Rs 288.3 on disinvestment hopes. Steel major - Tisco was the second biggest gainer among the Sensex stocks as the company hiked steel prices nearly four times during the year. This boosted the positive sentiment in the market.

Moreover, rising demand in domestic as well as international industry boosted the counter. As a result, Tisco was back in the black during the second quarter after suffering losses in the last few months. The scrip surged by 73% to close at an 18-month high of Rs 151.6. Another Tata group company - Telco was in top gear as its pet Indica raced ahead not only on Indian roads but also on European roads. The top selling Indica car boosted Telco's bottomline. Moreover, impressive sales growth in LCV & HCV pushed the Telco counter.

As a result, the scrip surged by 61.7% to close at Rs 161.4. Banking stocks witnessed a smart rally after the RBI cut bank rate by 25 basis points. Moreover, the government passed the Securitization Bill, which will reduce a major chunk of NPAs. As a result, ICICI Bank and SBI spurted by 63% and 56% respectively.

Domestic pharma major - Ranbaxy was another big gainer in the Sensex after the company received US FDA approval for generic accutane anti-acne drug. The company also managed to garner 90% market share of cefuroxime axe til in US. The stock has shot up by 37.7% to close at almost a 3-year high of Rs 593.9. Two wheeler major - Bajaj Auto witnessed a smart rally due to an increase in two-wheeler demand, mainly in Boxer. The scrip surged by 33% to close at Rs 503.3 Both the tech majors - Satyam and Infosys witnessed a smart rally due to a recovery in the US market and impressive quarterly results. The sentiment is positive as Infosys and Satyam have entered the Call Centre business too.

Satyam surged by 17.9% and Infosys gained by 17.2% to close at Rs 278 and Rs 4773 respectively. Despite major developments on the infrastructure front especially in the Golden Quadrilateral Project, cement stocks did not make concrete gains. Grasim announced an open offer for 20% stake in L&T at Rs 190 per share. Grasim gained by 13% while Gujarat Ambuja lost by 15%. ACC & L&T posted modest gains.

FMCG stocks were ruling weak as drought hit demand of FMCG products. As a result, FMCG major HLL nose-dived by over 18% and Colgate lost by 19%. ITC also slipped marginally over 1%. Media major - Zee witnessed a sharp fall. A fall in revenues and ratings sent the stock crashing. The scrip shed 13% to close below the Rs 100 mark.

HCL Tech was the biggest loser in the Sensex after the company reported a 15% drop in its Q 1 bottomline. PSU refinery major - MTNL lost significantly due to lower earnings after a significant fall in call rates. With the government not showing any interest in its disinvestment, MTNL lost by 25% to close at Rs 94.8. What lies ahead... The new year could prove beneficial for investors. New records may be seen on the Dalal Street.

Indian Investors has suffered losses for the last two years. Share scams, political trouble, Indo-Pak war fear, crash in US markets and a host of other negative news have broken the backbone of the Indian stock market. However, the sun is expected to shine brightly this year and Goddess Lakshmi may be more generous towards the Indian Investors for the year 2003. The year 2003 could prove to be a 'buy and earn' year.

The Sensex is expected to touch the 5,000 mark. Political stability, PSU disinvestment, Securitization Bill, better results expectation from Indian technology stocks, augmentation of up to 500 scrip from the existing 29 in the derivative market, increase in Indian GDP, FIIs buying interest and recovery in the US market could boost the fortunes of the Indian stock market. Moreover, efforts are on by Sebi and the Indian government to cleanse the Indian markets. Heavyweight - Reliance may touch the Rs 450 mark during the year 2003.

The huge gas discovery from KG basin and launch of WLL services after March could boost the counter. Moreover, the company is a prominent bidder for HPCL & BPCL. PSU stocks could be Heroes of the Year 2003. The disinvestment of HPCL and BPCL may boost PSU stocks. Moreover, the government announced disinvestment of Nalco, SCI, Engineers India and Balmer Lawrie. HPCL is expected to touch the Rs 700 mark and BPCL may touch the Rs 500 mark.

Others PSUs like Nalco, SCI, Engineers India, HPCL, RCF, NFL may rally smartly. Tech stocks have an important role in the stock market. The new BPO centres and addition of more US clients may push Infosys beyond the Rs 6,000 mark. Wipro may cross the Rs 3,000 mark. Moreover, second-rung tech stocks may rally due to better result expectations like Hex aware, Master, Geometric Software, NIIT, Hughes, VisualSoft, Polaris Software and Hinduja TMT. Pharma stocks, mainly domestic pharma may rally smartly.

Most of the domestic pharma companies emphasize on Asian, US and European markets. Moreover, the US approvals and marketing tie ups with US firms may boost domestic pharma stocks like Ranbaxy, Cipla, Dr Reddy, JB Chemical and Sun Pharma. However, MNC pharma stocks may be under selling pressure as they are failing to capture the Indian market. As a result, Pfizer, Glaxo, Burroughs Wellcome may see some selling pressure. Auto & auto-ancillary stocks may move fast in the year 2003. Increase in demand in the domestic market, better sales growth and models like Boxer, Indica and Scorpio entering the global market may boost the demand for two wheeler, LCV, HCV and cars.

Bajaj Auto, Telco, LML, M&M and Either Motors may rally. Auto ancillary stocks may rally as export sales are increasing on account of lower cost production. Stocks like Bharat Forge, SKF Bearing, Apollo Tyres and Mico may see a smart rally. Banking & finance stocks, mainly PSUs, may shine after the government passed the Securitization Bill. This could bring down the NPAs to a great extent. As a result, SBI, Bank of Baroda, Bank of India, Canara Bank and Oriental Bank may see smart gains.

Steel stocks may see solid gains for the year 2003 due to an increase in domestic as well as international demand. Moreover, hike in steel prices and restructuring of plants may boost the bottomline. As a result, Tisco, Jindal Steel, Jindal Iron, SAIL may shine. Not much growth is expected in the FMCG products, particularly HLL. There is stiff competition in the detergent and shampoo segment. Not much growth is expected here.

As a result, HLL, Colgate, N irma may see 20-25% growth in the current market. However, ITC may rally as the company will diversify into various businesses other than cigarette business. The scrip may touch Rs 950 in the new year. Cement, media and telecom, engineering and consumer durable stocks are expected to post modest growth. Derivatives Market Comes of Age Derivatives are said to have been in existence since Biblical times in various forms.

As far as the Indian financial market goes, it is more of a recent phenomenon. The age we live in is seen as the age of the derivatives market, as futures & Options seem to be one of the best ways of trading in the stock markets. Lower risk, lower investments and higher returns has made this segment popular with investors. The turnover in the derivatives market spurted by over 5 times during 2002. The turnover of 29 scrips on the derivatives market was equal to 75% of the cash market turnover on BSE and NSE.

On an average nearly 1000 scrips get traded on both the exchanges. The last three months has seen a significant rise in the derivatives market following the impressive results from Infosys and Satyam, discovery of gas by Reliance and disinvestment news on BPCL & HPCL. The market is however dominated by select scrips. Infosys, Satyam, Reliance, HPCL, BPCL and Digital accounted for nearly 70% of the total derivatives market.

Satyam accounts for nearly 15-20% of the daily turnover in the derivatives market while Infosys constitutes around 10-15%. Reliance makes up for nearly 9% while HPCL, BPCL and Digital account for 5-10% of the turnover on the derivatives market. Company % of the market turnover Satyam 20% Infosys 16% Reliance 10% HPCL 8% BPCL 6% Digital 5% Others 35% Total 100% Future prospects As we see it, the derivatives markets will overtake the cash market in the future. SEBI had announced that nearly 500 scrips would be added to the derivatives markets as against the existing 29 scrips. Therefore, the year 2003 could well turn out to be the year of the derivatives.

The derivatives turnover is expected to see robust growth in coming months. The retail investors, who have not been active in the derivatives market are likely to participate more in the derivatives market. This will trigger more volumes and boost the derivatives market. Moreover, FIIs, domestic funds and even operators are expected to play an active role in the derivatives market rather than the cash market. If 29 scrips can show a turnover of 75% of the total cash market turnover, one can imagine what will happen when more scrips are added. The derivatives market turnover may cross Rs 100 bn in 2003.

Cash may be king but the future lies in derivatives. Bombay Stock Exchange... February 18, 2002 - Bharti Tele ventures listing ceremony at the BSE. March 15, 2002-The Index Committee of BSE in its meeting decides to make the following changes in BSE-SENSEX: 1. Merger of ICICI Ltd. with ICICI Bank Ltd. : Post merger, the merged entity to be called ICICI Bank would replace ICICI Ltd.

The change would be effected on the day ICICI Ltd. stops trading (enters 'No Dealings') at BSE. 2. Merger of RIL and RPL: Post merger, the merged entity to be called Reliance Industries Ltd. would be retained in BSE-SENSEX. As both RIL and RPL were in BSE-SENSEX, the vacancy created in BSE-SENSEX due to merger of RPL with RIL was filled by bringing in HDFC Ltd. The change would be effected on the day Reliance Petroleum Ltd. stops trading (enters 'No Dealings') at BSE. April 26, 2002 - Punjab National Bank's listing ceremony at the BSE.

June 28, 2002 - I-Flex Solutions' listing ceremony at the BSE. July 9, 2002 - BSE launches an Internet Trading and Administration Terminal for Members, Branches and Sub Brokers called i-BAT (Internet enabled Broker Administration and Trading Terminals). This initiative enables all members of BSE to start offices anywhere in India. Members can also use this system to open offices outside India, subject to SEBI regulations applicable for opening offices outside India. July 9, 2002 - BSE celebrates its 127th Foundation Day.

To commemorate the occasion, the Exchange launches two firsts of its kind investor initiatives in the country: 1 a) On-line Trade Confirmation for investors- BSE launches a "Trade Confirmation System" on the Exchange through its website web Investors can confirm and verify their transactions done at BSE by simply filling the details of their transactions from the contract note on the designated form provided and a confirmation reply is generated instantly. This system is offered free of charge to investors over the Internet. Alternatively, those investors who do not have Internet access can also get their transactions confirmed at the BSE Investors Services Cell. 1 b) Arbitration Notification-Another feature that is launched on web is the Arbitration Notification system.

This system allows investors to view the schedule of Arbitration for their cases instead of having to approach the Exchange personally. The system displays the Reference number, Applicant and Respondent names, Date and Time of hearing and venue of Arbitration proceedings. Since this notification is constantly updated, investors can keep themselves posted up to date on Arbitration Schedules. 2) E - learning by the BSE Training Institute - The Internet venture is the first of its kind foray of an Indian Exchange into the E-Learning space. The launch of the initiatives was followed by a talk by Swami Parthasarathy, one of the greatest exponents of the Vedanta Philosophy on "Life in Focus". August 6, 2002 - The Governing Board of the Exchange amends the direct listing norms for companies listed on other Stock Exchange (s) and seeking listing at BSE.

The Board amended the norms in respect of the threshold limit, profit making track record, minimum market capitalisation of the company and dividend paying track record. August 29, 2002 - BSE welcomes the Kania Committee Report on Corporatisation & Demutualisation of Stock Exchanges, which was based on International best practices. The Committee Report was released on August 28, 2002. September 17, 2002 - As an investor friendly measure, the Governing Board of the Exchange decides that the member-brokers would be required to make payment and / or deliver securities to their clients within one working day of the payout of the settlement instead of two working days. This is applicable from September 23, 2002. The measure is for the benefit of the investors and adds to the overall efficiency in the utilization of funds and securities by them.

September 24, 2002 - Union Bank of India's listing ceremony at the BSE. September 27, 2002 - Justice D.R. Dhanuka (Retd) is appointed as Chairman of BSE. Justice D.R. Dhanuka (Retd) is a former Judge of the Bombay High Court and also practices in the Supreme Court of India in selected matters. October 7, 2002 - BSE's application for full membership of World Federation of Exchanges has been approved. World Federation of Exchanges is a global trade association for the exchange industry.

It is a great recognition for BSE as well as Indian Capital Markets as the selection process and procedure for obtaining the membership is very strict and requires compliance with World Federation of Exchange market principles. This membership provides a forum for communication, analysis and debate among members. Its purpose is to facilitate the representation, development of organized and regulated markets, and to meet the needs of evolving capital markets in the best interest of their users. November 29, 2002 - Allahabad Bank's listing ceremony at the BSE.

November 29, 2002 - BSE welcomes SEBI's approval of the Kania Committee Report on Corporatisation and Demutualisation. The Exchange is confident that the process of corporatisation and demutualisation of Stock Exchanges in India will be expedited and implemented so that the benefits associated with corporatisation and demutualisation are enjoyed by all Exchanges. INTERNATIONAL NEWS US economy and Wall Street After going through its first recession in a decade, the US economy seemed well on its way to recovery in the first quarter. However, any hope of a sustained growth in the world's largest economy soon turned into despair as a slew of corporate scams shook investor confidence in the world's premier financial market. Although consumer spending withstood the severe economic downturn, but corporate spending remained weak amid continuing uncertainty about future prospects. Fears of more terrorist attacks, concerns about a possible war with Iraq and firm oil prices pressured the American economy throughout the year.

The Federal Reserve, which cut interest rates by a record 11 times last year, resorted to just one cut this year. The central bank maintained a neutral stance saying that the risk of further weakness and threat of inflation were balanced. It blamed the corporate shenanigans, firm crude prices and war threat for the sluggish growth in the economy. But expressed confidence that the slew of monetary measures and strong fundamentals would finally lead to a sustained rebound in the years to come.

The slowness of the economy and uncertainty about profitability kept Wall Street on tenterhooks, while a plethora of financial scams led to a distrust of corporate America. Among the other factors that weighed on Wall Street through the year were fears of more terrorist attacks and an impending military conflict with Iraq. The stock market recorded its worst performance during October, while November turned out to be the best month and the generally strong month of December has so far failed to ignite a buying spree. The US indices are poised to register third straight year of decline this year since 1941.

Let's hope that the new year would bring more cheers for Wall Street and the struggling US economy. US Corporate Scams The slew of corporate scandals in the world's largest economy was clearly among the major highlights of the year 2002. The string of scams involving high-profile US companies rocked equity markets across the world, as investors grew wary about the credibility of corporate America. As you may recall the skeletons started tumbling out of America's cupboard last year when energy trader Enron collapsed. That in turn led to the criminal indictment of accounting giant Arthur Andersen. The smallest of the big five accounting firms was convicted for shredding Enron-related documents to thwart federal investigations.

Another Andersen client - WorldCom also had a great fall from grace when it admitted to accounting irregularities. While ex-Enron CFO Andrew Fast ow and former WorldCom CFO Scott Sullivan have been arrested, former WorldCom CEO Ernie Embers is still at large. John Rig as, the founder of cable television company Adelphia and two of his sons were arrested on charges of looting the Company of hundreds of millions of dollars. Tyco Chairman & CEO Dennis Kozlowski, who resigned amid reports of criminal investigation, was charged with sales tax violations. Former CEO of ImClone Systems pleaded guilty to several charges related to the insider-trading scam into the biotechnology firm. Martha Stewart, the design diva and CEO of the Company named after her came under federal scrutiny for insider trading charges.

Stewart sold ImClone shares a day before US FDA's refusal for the Company's application for its anti-cancer drug sent shares crashing down. US-Iraq showdown As US forces went about their task of hunting down terrorist mastermind and Al-Qaeda leader Osama bin Laden in Afghanistan, Washington started training its guns on another so-called "rogue" Muslim leader - Iraqi President Saddam Hussein. Throughout the year the world remained fearful of an impending strike on Iraq by the US. Global financial markets went into a tizzy as Washington stepped up its anti-Iraq rhetoric and started mobilizing support for the use of force against Saddam. Crude oil prices touched multiyear highs, stock markets tumbled and gold gleamed, as investors became wary of an imminent US-Iraq showdown. Then came the annual UN General Assembly session where US President Bush warned Saddam of serious consequences if it did not complied with UN resolutions on weapons inspection.

Unperturbed by the US rhetoric, Saddam initially resisted the American pressure to allow UN weapons inspectors back in Iraq. But faced with a threat of military strikes, Iraq later accepted new UN resolution on weapons inspection, calling for unlimited access to UN inspectors. UN inspectors continue to look for the so-called weapons of mass destruction (WMD) while Iraq has brought out a dossier claiming it doesn't have WMD. US, British and UN officials have expressed their unhappiness over serious omissions in the 12,000-page weapons declaration, while Iraq has invited CIA agents to the country to provide evidence that it still possessed weapons of mass destruction. Bankruptcies galore A string of US firms went under this year.

While some crumbled under the persisting weakness in the economy others fell victim to management improprieties. WorldCom had the dubious distinction of filing for the largest ever bankruptcy in the history of corporate America. September 11 attacks and the ensuing slump in worldwide airline business took its toll on US airways and United Airlines. United Airlines, the No. 2 American carrier became the largest airline ever to file for chapter 11 bankruptcy. US Airways, the No. 7 American airline, too crumbled under falling traffic in the wake of the Sept 11 terrorist strikes.

Discount retailer Kmart Corp succumbed to weak sales and stiff competition from the likes of Wal-Mart. Kmart's was the biggest ever retail bankruptcy in the US. Fibre optic network operator Global Crossing, which also became a subject of federal investigations for questionable accounting practices, went bankrupt due to tough business environment. No. 4 US cable TV firm Adelphia Communications, which was in news for its shady finances and fraud founders, was another major firm to go under.

Among the other notable bankruptcies included US telecom major Globalstar and insurance giant Conseco. The latter became the third largest US company to go under, behind WorldCom and Enron. Venezuela grinds to a halt Another Latin American country was hit by nationwide unrest against the autocratic rule of President Hugo Chavez. The general strike, which entered its 22nd day on Dec 23, has paralyzed an industry that provides more than 70% of the country's export revenue and is the fifth largest oil supplier to the world. Business, labor and opposition political parties called a general strike Dec 2 to demand Chavez's resignation or an early election, accusing him of failing to revive the economy, widening class divisions and ruling autocratically.

Under Chavez, Venezuela's economy shrank 6% in the first nine months of 2002, unemployment climbed to 17% and inflation to 30%. Oil exports are critical to Venezuela's economy, accounting for 75% of total exports and half of government income. Chavez, who was elected in 1998 and survived a coup in April this year, refused to step down. The oil industry strikers have vowed to stay out until the president quits.

Argentina... cry for me In a desperate attempt to salvage the economy from four years of chronic recession, Argentina decided to devalue the peso by nearly 30%. The Senate gave special powers to the newly elected President Eduardo Duhalde to take emergency steps to reverse the economic turmoil. The decision to break the decade-long peg with the US dollar came after several days of looting and violence which killed 27 people and prompted two Presidents to resign amid the worst civil unrest in the history of Argentina. Declaring a public emergency in economic, financial and exchange rate policies, the Bill aims to create conditions for sustainable economic growth that would allow Government to renegotiate Argentina's huge $141 bn debt. Shortly after being worn in, new President Eduardo Duhalde confirmed the suspension of Argentina's $141 bn public debt, and declared the country bankrupt. Argentina had an estimated 15 mn people living below the poverty line while unemployment rate hit a record 18.3%.

The main cause of Argentina's huge debt burden was years of Government overspending and heavy borrowing. The Latin American country, which a decade ago grew at a healthy rate of 9%, plummeted to its fourth successive recession in 2001. According to analysts, problems for Argentina were compounded at the start of the 90's, when it decided to peg its peso one-to-one with the US dollar. While the move was good enough to weather the last economic crisis by containing the hyperinflation, the subsequent overvaluation in peso rendered Argentina's exports increasingly uncompetitive abroad. Euro becomes legal tender In a move that was aimed at bringing more peace and prosperity in Europe, nearly 300 mn Europeans across 12 nations started using Euro as a common currency on Jan 1st. Familiar currencies like the drachma, peseta, franc and lira lost their status as legal tender in Euro zone countries once the Euro became the sole currency and the most widely used common currency since the Roman Empire.

Banks across Europe loaded new Euro notes into their ATMs ahead of the changeover to Euro. Around 50 bn coins and 14.5 bn bank notes worth $568 bn became legal tender amid widespread celebrations across Europe at the stroke of midnight on New Year's Eve. Among the countries that accepted the changeover to Euro currency include, Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal and Spain. Among the European Union members that preferred not to join the Euro Zone were Great Britain, Sweden and Denmark. Andorra, Monaco, San Marino and the Holy See (Vatican City) also adopted the Euro. It also became the official currency in the Yugoslav republic of Montenegro and the southern Yugoslav province of Kosovo.

Microsoft triumphs in the anti-trust case The software bellwether all but sealed the case with US regulators after reaching a settlement with the Department of Justice and nine states. But nine other states refused to accept the deal and proposed their own remedy. Microsoft survived the minor scare and secured a major victory after a US Federal judge approved the settlement between the software titan and the Justice Department. US District Judge Colleen Dollar-Ko telly set aside nine non-settling states' demand for stringent penalties against the software behemoth. However, it's still not over yet for Microsoft.

The State of Massachusetts appealed the Federal judge's endorsement of Microsoft's settlement with the Justice Department. Massachusetts is among the nine states that refused to ink the Justice Department's deal with the software titan. West Virginia is yet to announce its decision on the matter, while California, Connecticut, Iowa, Florida, Kansas, Minnesota, Utah and the District of Columbia said they wouldn't appeal. Global Markets- On the road to recovery The global markets have been lackluster in 2002.

The lag effect of 9/11 on the global markets manifested itself fully and there has been a general slowdown coupled with rising unemployment. Demand for capital goods have fallen across all countries. The biggest spender in the world, the US is seeing inventories piled up as consumer spending reduced. Japan and Europe, which financed the deficit in the US economy have problems of their own.

All these seem set to change in 2003. A revival is anticipated in the global economy with the only possible event risk on the horizon being the war with Iraq. Even this could turn into a blessing in disguise for a beleaguered global economy as wars have always been followed by periods of economic boom. The last great boom that lasted from 1992 to 2000 had its root in the Gulf war of 1991. A look at the markets in the last one-month also indicate that the markets may have turned a corner, barring Europe where the major indices, the FTSE and the DAX have taken a beating The US economy is showing mixed trends as demand measures such as personal consumption expenditures and retail sales are holding steady. This consumer spending accounts for whatever growth shown in the economy.

Inflation is under control though unemployment is a problem. In the third quarter 2002 the U.S. economy grew at an annualized rate of 3.1 percent, higher than second quarter growth of 1.3 percent. Consumer spending, the largest component of national output went up by 4.2% during the third quarter, the largest increase of 2002 so far. The overall outlook is towards the positive despite no employment growth and decline in industrial production. The US markets have reacted to the same and there is a moderate rally in the stock markets with NASDAQ gaining 5.7% from 28th October when it was at 1315 to 1390 as on 10th December. Similarly, the broader Dow Jones Industrial Average (DJIA) also gained 2.5% from 8368 on 28th October to end at 8574 on 10th December In the European markets, at 1.3% in 2002, the GDP growth rate is both, lower than earlier forecasts as a result of September 11, 2001 and lower than most forecasts by national governments and like in the United States, recovery has started in the course of 2002.

Slow growth is reflected in unemployment rising by 0.25 percentage points between 2001 and 2002 (from a low point in 2001), while inflation falls by 0.75 percentage points. The German index DAX that can be taken as an indicator of the EU community has fallen by 1.4% from 3102 levels in October to 3058 levels on 10 December. In UK, while service sector has grown, manufacturing output fell by 2% this year, the largest fall for a decade. The Gross Domestic Product (GDP) is growing by 2% this year and expected to grow by 2.5% next.

Unemployment is at manageable levels. The stock markets have reflected this sentiment with the FTSE losing 3.8% from 28th October to 10th December. The FTSE at 4090 levels on 28th October fell to 3925 levels on 10th December. In Asia the markets are improving as South Korea and Thailand stock market are attracting FII money in their latest bull run. South Korean index KOSPI has gained by 15.22% from levels of 611 in October to the current 700 levels.

South Korea economy is expected to grow at 6% this year, thanks to robust recovery in exports. The Government of South Korea is taking all precautions against massive defaults by informing tough restrictions on credit card use and property transactions to avoid repeat of Asian Crisis of 1997. Japan however remains a concern with slowing exports and production. Business confidence has gone down and investment is sluggish.

There is a danger of it entering into a long-term recession. Exports grew in October representing the first positive growth in six months. Industrial production has slowed by 0.3% in October. Unemployment has risen to historic levels at 5.5% in October and total per capita income has declined. However corporate profits in Japan have improved in the first half of the year and this has driven the stock markets marginally. The Nikkei has grown by 0.53% from the levels of 8757 on 28th October to 8804 on 10 the December.

Back home, the flagship Sensex has risen steadily by 7.73% from the level of 2998 on 28th October to end at 3230 on 10th December. The macroeconomic indicators are strong. The industrial production has shown a rise. Forex reserves are strong at $66 billion. The effect of monsoon has not been as bad as it was feared. Commodity sectors are seeing a rise in the topline, while IT sector revival is in place.

Most companies are expected to post good results in the third quarter and one should see a spurt in the market in line with the global markets. The US Fed said in a statement "Heightened Geopolitical Risk" is a factor that will have an impact on world markets in January - a reference to a possible war with Iraq. But the markets are expected to recover soon after a fall for a short period. This has been the experience with wars so far and one can believe that it will be similar on this occasion. Two important economic variables- Oil prices and consumer spending will hold the key to global markets in 2003.

Crude prices are likely to move higher as indicated by the movement of January oil futures that are in the region of $30 per barrel. Any indication of war like US troops setting up base in the Gulf region or movement of arms is expected to send oil prices soaring. OPEC's decision to cut down.