The Hindu Business Line : We are still in comfort zone

HALFWAY across the globe, they worry if the obstinate Ophelia `just sitting out there' will come back to hit as in the recent case of the devastating Katrina landfall. The worry here, however, is if what has been rising steadily on the stock market charts will head for a freefall.

"Don't worry, be happy," says Chiddu, as if he could read the minds of small investors who don't want to hear a big bubble go nastily pop all of a sudden. To complicate matters further, they continue to worry because they know that astute politicians dole out hopes though with a short shelf life. Meanwhile, there are anxious queries to catch up with.

To worry or not to worry?

That's the new Hamletian dilemma that everybody other than chronic optimists suffer from. To resolve this, the FM says that the Sensex crossing the 8,000-level is not a cause for `worry or concern.' To reassure, he has posted his men in the Government and the market regulatory body on the tower to keep a close watch on the domestic bourses, and they are all looking through binoculars for anything that resembles a bear!

Should we read between the Minister's lines?

I'd suggest, you should. Line 1 says, "Stock market movement is orderly." And line 2 is, "Investors should take informed decisions." By trying to read between the two lines, you may cause much discomfort to yourself, so here is a line 3: "We are still in comfort zone."

What is `comfort zone'?

It is "an environmental temperature between 13° and 21°C (55° to 70°F) with a humidity of 30 to 55 per cent," according to www.merckmedicus.com. It is the range of temperature within which a subject will feel comfortable, though not necessarily neutral, explains www.learn.londonmet.ac.uk. "Comfort zone is the term used to denote a type of mental conditioning resulting in artificially created mental boundaries, within which an individual derives a sense of security," is a discomforting definition on Wikipedia. "These boundaries tend to result in an internal state of mind, an example of which would be rigid attitudes and beliefs, which may not necessarily be true," adds http://en.wikipedia.org. And you may wish that what it says weren't true!

Can we be confident about confidence?

Chiddu says that the index crossing the 8,000-mark shows that business confidence is very high. If you believe that, it means your confidence in the FM is very high.

Is he a soothsayer?

It seems so because he's said that the second quarter results of business houses and banks are expected to be as good as the first quarter results. That means, he knows how the July-September period will end. Some accountants say that one has to interpret the FM's statement not as a studied forecast but as a veiled diktat!

To PE or not to PE?

PE is short for price-earnings ratio, defined as "the market price of a common share divided by its earnings per share for 12 months," in www.globefund.com. It is "the most common measure of how expensive a stock is," advises money.guardian.co.uk. The ratios of both the Sensex and the Nifty are at present hovering between 14.5 per cent and 15.5 per cent, says the FM, and adds, "At this level, they look comfortable." If that doesn't make you comfortable, rest assured that you're just normal.

SayCheek@TheHindu.co.in

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