Every call that I now answer starts with "ketla sudhi?" (till what level?) That is because everyone thinks this rally will blow over and investors will be caught holding junk stocks at designer prices. So, every second person I meet these days asks: shall he sell now, or day after tomorrow at a five per cent higher price or next week at a 10 per cent higher price or, never at all, expecting that stocks will keeps rising and the market will emerge like some eternal party which never ends and to which all are cordially invited.

It sometimes pays not to know what is going to happen tomorrow or day after tomorrow but to know what is likely to happen over the coming year. It sometimes pays not to search for the moral of the story in every square centimetre of the bull run but to stand aside and see the big picture.

And the big picture that I see is exciting. This is what makes it so: wefinally appear to be having the makings of a stable government. If it survives for a respectable length of time, it would not be unreasonable to expect that reforms and policy changes will help the domestic industry and, therefore, the domestic markets. Not only will it move the country, it will also protect the country's industry -- the best of both worlds.

What has transpired in the capital market has been just as exciting. The badla system has taken off in style, reflected in the increasing volumes on the stock exchanges. With its checks and controls, the old system is back, which is nothing but a formalised funding arrangement for the man who thinks that stocks will rise and is willing to take a position based on his perception.

In effect, what the badla mechanism means is that the optimist who went to the bank and was funded cautiously to the extent of 50 per cent of his holdings can now be funded to the extent of 90 per cent of his holdings (assuming that the margin is 10 per cent on his holdings).With an increasing number of exchanges going online, it is possible now to trade not only more actively but also more conveniently. One can take a position on the National Stock Exchange, (or the Calcutta Stock Exchange or whatever regional exchange there is), then roll it back on the NSE and shift to the BSE almost effortlessly, without taking a hit on arbitrage or brokerage. This is unleashing the latent power of the Indian stock market. With the second largest population in the world and the second largest number of scrips in the world, all we needed was the right infrastructure -- which is coming into its own now.

Analysts the world over are beginning to revise their opinion on South-east Asia. With currencies ceasing to weaken further, analysts are beginning to predict that any strengthening will only increase the value of their portfolios, provided they pick the right country and the right counters.

India is emerging as the investment opportunity of choice. We have a strong currency (relatively), abroad economy and there is a widespread anticipation that the new government will revive the economic mood.

The result: funds which never invested in India before are picking up pivotals in big ways. Select Japanese funds (which never earlier invested in Indian paper) are investing aggressively in Hindustan Lever, Jaiprakash Industries, Videocon and stocks of financial institutions. Interestingly, I see the emergence of a strong debt market running along with the newly networked market.

This is how: With the badla mechanism becoming increasingly popular, someone sitting on cash in Ludhiana for a period as short as seven days will be willing to fund 2000 GNFC shares and, in effect, end up financing someone in Jamshedpur for the said amount. This will elevate the Indian stock market from one dealing only in risk income to one dealing in fixed (quasi) income as well.

Permit me to dream -- realistically. The day is not far off when public call offices (PCOs) peppered over the country will venture to havetheir own V-Sats, making it possible for traders to drive in for the latest quotes and trades. Even if one assumes five traders per screen and a reasonable number of such screens all over the country, you have an incremental 50,000 traders coming into the picture. Compare this number with 1,000 traders in all towards the early part of the nineties. This will lead to the democratising of the stock markets on a far bigger level than has been seen till date in this country.

Two points need to be kept in mind here. One, there is a growing anticipation that the next credit policy to be announced by the RBI will make it possible for banks to finance badla operations on the stock market. More than institutionalising the badla mechanism, the move will have another big impact. It will take the volatility out of stock market financing and give long-term buyers a clear fix on their funding cost. Eventually, this will trigger long-term purchases by those fancying stocks funded indirectly by banks. The short-termoutlook for playing in stocks might well go.

Two, stock markets do not move on performance (as was proved conclusively in the bear market which stretched over the last three years). Stock markets move on perception. A change in sentiment has a greater impact than actual facts. Human reaction is based largely on the environment in which it is made. The momentum of the ongoing trend and enthusiasm which has now spread to the B2 list prompts me to say that an environment is now being created where retrospective corporate performance will not only be fairly assessed, but prospective performance will also be factored into pricing. In short, the environment is being created where it will be possible for value to be unleashed.

Moreover, the market appears to be waking up after four years of indifference. The corporate progress that has transpired in the interim and which escaped being priced appropriately is now being re-assessed: excellent news for shareowners. As a result, in the absence of earthshakingdevelopments, the boom appears to be here to stay.

The strengthening of the stock markets should not be seen in isolation. Again, turn to the big picture.

The rally will increase market capitalisation by hundreds of crores of rupees. A part of it encashed will go into real estate, consumer durables and the industry. My friend, we are talking of an industrial turnaround triggered by a change in sentiment in the market. If I had some spare change, I would look for bargains in the A list of BSE quoting at a p/e of less than 10 on anticipated earnings.