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The Sensex Rise and Fall

Some are very sure that the only way for the Sensex is up (barring the inevitable correction). But can anyone really be all that sure? After all, when things go up, they almost always come down

The day before the good old Sensex crashed 400 points last month, not once but twice in a row, a brave soul predicted that it (Sensex) would more than double to 30,000 in six years. I am always wary of economic pundits, but this one sounded near the bone.

After all, if the Sensex can double in the past six years, why shouldn't it repeat its performance in the coming six years? History does repeat itself, though first as a tragedy and then as a farce. Is it possible that the sequence might be reversed this time? This means that Infosys will be quoted at around Rs 5,000, maybe 10,000; Reliance Industries at 3,000; Larsen & Toubro also at 3,000, and believe it not, ABB at 8,000. Almost anybody who has a few shares up his sleeve will then be a millionaire five or 10 times over, while he sit hunched before his laptop, munching caviar and guzzling champagne as the screen explodes before his eyes.

But you can't be too sure. If things can go up, they can also go down, and almost always do. The other day I was going over my old diary - about 50 years old - listing some shares that used to be quite active at the time. Many of them have just vanished into thin air. Where is Metal Box now, or, for that matter, a company called Guest, Keen Williams? I had purchased most of these scrips for 10 rupees apiece. At that price, you can't buy even a hundredth of Infosys now.

I am not saying that Infosys will disappear six years from now, or Larsen & Toubro will break up, but who would have thought that a company like DCM would not only split up but nearly collapse? These oldies have been overtaken by companies like Reliance and Wipro, which did not even exist 50 years ago and Dhirubhai Ambani was manning petrol pumps in east Africa.

Fifty years ago, there was no Sensex. There were no pink financial papers either. Most newspapers devoted less than a page to financial news and the share market occupied a couple of columns. If a share went up from 10.50 to 10.75, we used to celebrate. Beer was cheap. I had a broker who lived in Bombay (as it was then called) and I worked in Calcutta, and since there was no STD and I had no telephone at home, we never spoke to each other. I would write long letters and he would reply in his squirrelly hand, telling me about his grandchildren and occasionally about some bluechips.

There were no sharp ups and downs, except maybe during Budget time, which came only once a year. Incidentally, there was no TV, no computers and, of course, no e-mails, since the economy was virtually closed, and so were most economies elsewhere. In fact, we didn't bother much about the market, or, for that matter, anything else. The politicians and their faithful servants, the babus, managed the economy for us, and since we had no idea about what was happening elsewhere in the world, we were or pretended to be a contented lot. Nobody had any dollars or pounds, and only bureaucrats and businessman traveled abroad. Even businessmen had to beg for foreign exchange, including people like Ghanashyam Das Birla, who once refused to visit Moscow on a delegation because Morarji Desai wouldn't to give him enough dollars.

It is the markets which now rule the roost, not the government but most people are still whistling in the dark. The Sensex may indeed touch 30,000 in six years but it may also sink to 3,000.

God help us if it does.