What a Long Strange Trip It's Been ; the Stock Market's Benchmark has Gained Seven Times Since 1991 and Annual Inflows From Fiis Are Up 10-Fold Since They First Began Investing in Indian Equity in 1993. But Guess What? Stocks Are Actually Cheaper Today Than They Were 15 Years Ago.

Summary

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Dinesh Lakhani, 62, has been investing in equity for the past 30 years. He first took the plunge when multinational companies in India were forced to dilute their holdings in 1977. From thereon he moved into Indian blue-chips, and today Lakhani's portfolio is worth a king's ransom. But he's quick to remind you that not everything he touched turned to gold. "I have plenty of dud stocks, many of which were bought during the IPO (initial public offering) boom of 2000. I have learnt from my mistakes."

Lakhani's journey over the past 15 years at a broad level mirrors that of most investors on Dalal Street-retail or institutional. Virtually all the rallies-till the last four years-have been followed by crashes, many of them brutal in nature resulting in scores of investors losing their shirts, and more. Since December 1991 till date, the Sensex has jumped seven-folds to 13,400 from 1,909. However, these runs have neither been secular nor smooth. Barring the initial euphoria in the early 90s-once economic reforms were ushered in, and once foreign institutional investors (FIIs) were allowed to invest in India-the markets flattered to deceive right through till mid-2003, a period during which the benchmark Sensex wobbled in a 2,000-point range. It's been another story since then, with the 30-share index zooming from 3,000 to 14,000. In the last four years till December 15, 2006, FIIs have pumped in nearly $34 billion (Rs 1.53 lakh crore) into Indian equities, as against $15 billion (Rs 67,500 crore) in the 10 years from 1993 to 2002. Despite this huge surge in the index, the price-to-earning ratio (p- e) of the Sensex is at 23 times, as against 40 in 1993.

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What a Long Strange Trip It's Been ; the Stock Market's Benchmark has Gained Seven Times Since 1991 and Annual Inflows From Fiis Are Up 10-Fold Since They First Began Investing in Indian Equity in 1993. But Guess What? Stocks Are Actually Cheaper Today Than They Were 15 Years Ago.

For the estimated 10 million investors in Indian equity, it's been a long, wild, often painful, and eventually fruitful, ride over the past decade-and-a-half. Pre-liberalisation-and a few years after it too-the Bombay Stock Exchange (BSE) was perceived to be a cosy coterie of brokers, and the exch...

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