sensex survey

i conducted a very small, unscientific survey of a few IT colleagues to guage the interest in the stock markets and what they thought about it, and how their investment habits have been affected by the sensex rising. the results are startling - majority are 'not interested' even answering the questions - forget about investing in the markets - some are possibly considering mutual funds investment but not giving very serious thought.

most are feeling left out of the boom and have decided that it is too late to get in now. even a correction of 2000-3000 will not lure those who have not at all invested in the market in these last 4 years. actually with such a drop in the index, they will grow strong in their coviction that they were right not to invest in the stock markets. for those, who are already invested and if their investment starts giving negative returns, will try to average out.

my feeling is that those who had the risk appetite already entered the markets with cash when the 'sensex was at 4500 - 7500' (i am going to abbreviate this as SWA4.5-7 and similarly in the rest of the article). out of these a few made an exit when SWA6.5-8.5. those who 'finally' took the plunge, invested in mutual funds. at the current levels, there might be very few retail investors who will start afresh. those who have continously made money in the boom are willing to take more risks and they are the ones who also like to shuffle their portfolios.

the current market movements are totally dependent on the foreign money coming in and all the analysts sitting in india cannot say now (nor could they say it when SWA6-7) when the inflow is going to stop (and when the outflow will start). all the discussions about crude oil price, dollar value and u.s. interest rates have been taking place since SWA6-7. at that time there was also a story going around about how the hedge funds were bringing in hot money and that that was the reason of the increase and will also be the reason of the crash (that never came). these days there are even fewer stories about these hedge funds.

i have been reading about the japanese boom and bust in the 1980s-1990s and trying to find what analysts used to say in those days. i am sure there is a comparison to be made with the current indian scenario. e.g. '... will be the leading power in the world'. in 1985, the blanks had 'japan', now 'india'.

btw, the 9 questions were as follows:
1. how much is equity a part of you asset allocation?:
2. the equity market is at all time highs and seems to be overvalued, are you inclined to increase/decrease equity as part of your assets?
3. do you think the sensex will fall (rise) in the next 6 months and to what levels from the current 11500+?
4. on the downside at what levels do you think the sensex can decline to (lowest) in the next 1-5 years?
5. on the upside at what levels do you think the sensex can touch to (highest) in the next 1-5 years?
6. if you have not entered equity at all, do you feel you have missed the bus or do you smile and say this is going to fall like a pack of cards and then i will have the last laugh and possibly re-enter?
7. did you ever think that the sensex will never go beyond 5000, 6000, 9000, 10500 etc.?
8. do you think a scam is going on?
9. which sector are you most optimistic about? (e.g. metals, manufacturing, fmcg, telecom, IT etc.)