you feel that you have been trampled by the bear run in the stock market crash of 2000-01,
having picked up tech stocks at their peak prices, then here are some words of
encouragement for you. According to Gul Teckchandani, chief investment officer, Sun
F&C Mutual Fund, the current valuations of tech stocks are not in tune with
fundamentals and reality will soon catch up. He feels that present time is ideally suited
for long term and patient investor, who should use this opportunity to buy into tech
stocks for long term holdings.
According to Mr. Teckchandani the
current year's budget was a pragmatic budget as it sought to stimulate growth and pursue
economic reforms with a renewed vigor. However, the euphoria of a good budget was short
lived as the stock markets fell substantially, largely in line with the fall in the global
Since the last 12 months, the
markets have fallen by more than 50%, after touching a 6,150 in February 2000. This fall,
apart from the global meltdown, was exacerbated by the domestic technical problems related
to some payment problems in the Calcutta and Bombay stock exchanges.
However the fundamentals of the
Indian economy have not changed dramatically between February 2000 (index 6,150) and now.
Moreover, India continues to remain a safe heaven for global investors, which is
corroborated by the fact that the FII inflows, since January 2001, have crossed Rs. 10,000
crore. The fundamentals of the economy continue to remain strong and the markets are
showing a lot of strength at current levels.
The services sector has had the
highest, most stable, growth rate of 7.4% p.a. over the last 10 years. The services sector
will continue to be an important driver of overall economic growth and productivity for
India going forward. The share of the information technology (IT) sector within the
services sector is expected to increase by leaps and bounds. With the US economy showing
signs of slowing down, the Indian IT industry can see a further boost in business as many
US companies have acknowledged an increasing trend towards outsourcing, and countries like
India and China are expected to gain substantially from this development.
Mr. Teckchandani reiterates that the
technology sector is Indias mainstay and we have a competitive advantage. Hence
technology stocks should continue to do well. The software services businesses has not
recorded negative growth, but the current valuation reflect the stock markets
expectation that in all probability there will be negative growth. This, in Mr.
Teckchandani's opinion, is only sentimental as the software sector continues to deliver on
the fundamental front. So, according to Mr. Teckchandani, this is the time for the
"patient long term investor" to buy with a medium to long term perspective, i.e.