A Sustained Bull Run

Do we now have most of the factors in place for a sustained bull run? It seems absurd to ask this question with the market trading at mid-1993 values. But it might just be so.

In terms of corporate results, the key for better market performances is not good performance in itself. It is improved performance with the likelihood of further improvement in the future.

If one ignores the IT sector, Q3 and Q4 results suggest that corporate profitability elsewhere has improved broadly and substantially. With a decent monsoon in prospect, better results through 2003-04 look very likely.

The macro-economic prospects are reasonable. Most forecasts agree that 03-04 will see higher GDP growth. Forex reserves are more than comfortable, in fact the RBI is suffering a mild attack of the Dutch Disease.

The strength of the rupee vis-a-vis the dollar might retard some exports. But it could also induce exporters to look for business denominated in sterling, yen and euro, since the rupee has lost ground versus those currencies.

Domestic inflation seems set to stay low if oil prices keep falling and the monsoon comes through. Interest rates should stablise around current levels rather than move much in either direction. There shouldn