I have always maintained that in the short term, stock markets are irrational. But yesterday’s 1,744 point, 9 per cent fall foxed even the most hardened among us. That the fall would come was expected, my rounded range was between 600 and 900 points. When the fall is double to triple of one’s estimate, it’s time to bow your head before the Lord of Volatility — the market itself — and exit as gracefully as you can. Just as I was doing that, the market changed direction and finally closed a statistically insignificant 336 points lower. Phew, what a day!

Volatile Wednesday lashed out in a fury unseen in recent times. The fear that dollars, which have been the driving force behind taking the Sensex to over 19,000 with expectations of realms beyond, would stop flowing and maybe even exit the Indian market have been proved wrong. That was expected, since — and at the risk of repeating myself — the India story remains unchanged and if short-term numbers are to be seen, is moving towards a better expectation level.

The first bunch of 150 corporate results that have come out indicate a 24 per cent rise in topline and 40 per cent growth in bottomline (the line that really matters). If this indication becomes a trend for the 30 companies comprising the Sensex, we’re looking at a market that’s offering a 40 per cent growth that’s available at a PE of 25. Use any discounting or growth-valuation ratio, and it’s attractive in absolute terms. That is, if you were to look at the Sensex in isolation, it is investment-worthy.

... contd.