The political factor has been playing havoc with stock markets and the investor has been vexed so often and driven to the end of his investing wits. He desperately needs to know how he can protect his hard-earned capital invested in the market at such desperate times.

First, let us come to terms with the politicians. Many investors get angry often with the politician for cheating on what is expected of him, that of providing stable and good governance. The anger, I want to point out is probably misplaced due to a conceptual flaw.

For, unlike what most investors imagine, today's politician is here to serve himself first but not the nation. If he does serve the nation, it is by theway.

Former governor of Maharashtra C Subramaniam put this beautifully the other day at a public function. In Rama Rajya, he pointed out, the king lived for the people. Because this is the `kula dharma' for the ruler. In Ravana Rajya, however, people lived for the `pleasure' of the king. Whether it is BJP, Congress (I), or the United Front, we are clearly not living in Rama Rajya.

Vast majority of the public, including millions of investors expect the rulers to be good. They expect to find political leaders by the dozen, who will rise beyond themselves for the good of the people and nation-building. It is time investors woke up to the hard truth. Mahatma Gandhi, Vallabh Bhai Patel and Nelson Mandela are exceptions than the rule.

Except during wars or freedom struggle, politicians are there to enrich themselves, albeit on the pretext of serving a public cause. So, stop ruing the game of the politicians and start figuring out a strategy to manage your investments in the next few days. That is, manageyourself, and not runaway in spite of the turbulent politics.

The drama of Fernandes Vs. Bhagwat will unfold in the parliament around April 16. The stock markets can see many tremors around this time. You have to work out your strategies much ahead. Let us take a brief look at the likely game play of the major actors in the evolving political drama.

BJP and the Congress (I) or any other political party will put their self-interest before that of the nation. Nothing to be shocked about! Decimating each other and not self-sacrifice is the name of the game.

Jayalalitha is trying to save her skin, BJP must be guessing if it should go to the polls again and Sonia Gandhi has to choose whether it is the right time to strike. Let us take a look at what the implications are for the alternative events that can happen.

BJP is now ready to accept the demand for the appointment of a JPC on the Bhagwat issue, having jettisoned AIADMK's support. This would take the wind out of the opposition sail. Yet, theopposition may approach the President to ask BJP to prove its majority in the House alleging that it has lost AIADMK's support. If that happens, the BJP may well be given some time to prove its majority. Anything can happen then, given the fluid situation that exists now.

The President will be in no hurry to direct a mid-term poll. Considering that a mid-term poll is tilted favourably to the BJP at this point, post-budget proposals, others may not be keen to press for it.

TDP is unlikely to support the no-confidence motion as the Congress coming to assume power is against Chandrababu Naidu's interest in the forthcoming state elections. The Yadavs are fluid and can side with any side only to restore their own standing and bargaining power.

Given the circumstances, it is a fair assumption that the passage of the Union Budget will not be harmed. That is because, no one would gain by going against the budget, not even dissidents. The economy is at a crucial juncture, where it is calling for reinforcement ofevery kind, both physical and psychological. This is well recognised by all parties.

And even if one should think of an alternate budget, take a look at what faces you. The only advantage of strong growth in agriculture is unlikely to be the same in next year, as one year of excellent growth is followed by another tame year.

Apart from the consumer goods industry, growth in several sectors is yet to pick up. The new government cannot afford to increase taxes further, direct or indirect, immediately. Nor can it afford to withdraw the concessions proposed by Sinha. The rationalisation of excise duties is too welcome a step that no new government can go back on it, without public outcry.

Irrespective of who is in power, the need to continue to search for methods to stimulate industrial production persists. What are the likely steps? The RBI governor may well agree to reduce interest rates given that the inflation is still under control. A further reduction in CRR is quite likely. From these, one cannotautomatically assume that lower interest rates would spur industrial production. With ballooning NPAs, banks are unlikely to lend indiscriminately.

Lower interest rates and credit flow will facilitate only well-managed companies to become better and strengthen their bottomlines. Apart from these forthcoming measures, there have been quite a few positive spin-offs from the government's recent monetary and fiscal policies.

With interest rates on saving instruments dropping, investors have been forced to return to the stock markets. The mutual fund industry has been able to attract funds once again.

But that alone cannot change the fortunes of the corporates. Turnover and profits can come only from growing consumer spending.

And here we have seen encouraging trends in the consumer electronic industry, the two-wheeler industry and the white goods industry. Good agricultural production this year is likely to sustain this pattern in the next twelve months. Incentives given in the budget for the housingsector should give considerable impetus to the cement, steel and other industries associated with housing.

The telecommunication industry is slowly taking off and will catalyse economic activity on its own. While these are already ongoing processes, the need for the future is to sustain and improve upon GDP growth. This is where the prospects are rather flat.

With savings from the public sector dwindling, there is no way investments can go up. If household savings have to go up further, more incentives will be needed. Feeling euphoric about good agricultural production in one year is no solution for the future.

The track on FDI inflow is not fully encouraging. So what does the investor have upfront?

We are back to the Hindu growth rate of GDP! No more can we see any concrete plans to push up the growth rate to 7 per cent. Citing the slow-down in global economic activity is a lame excuse for an economy, which is not really export-oriented.

That brings you face to face with what price you pay forindividual shares. The price-earning ratio. The PE ratio has been moving up in the past three months, but may stand well discounted at the current level.

No assessment of the market is complete without looking at the likely investments by FIIs. While they have been making a slow return, let us take a look at the likely scenario in the year ahead.

The Dow Jones has crossed the 10,000 mark, despite an unexciting performance in the last quarter. Net profits have actually moved down one per cent. The only positive aspect is that unemployment continues to be at a low level and the consumer spending is still on the uptick.

But this can well be a bubble. Analysis of past history shows that every time the Dow Jones made a high water mark, it has been followed by a retreat, of often around 40 per cent. One should not rule out the possibility Dow Jones retreating to 6000.

The American dream is running on the back of consumer confidence. It is not without reason that Allen Greenspan had earlier expressed hisuneasiness about the irrational exuberence in the US stock markets. He is aware of the weak spots in the American economic chain.

What is the implication for India in all these? Should the US stock markets start to retreat, it will come as a boon to India! That is because the fund managers book profits in a hurry and pull out funds. They will have no choice but to look for alternative destinations.

And India will certainly attract more funds. That is because, even though there is no great fireworks taking place in the economic scenario, no one can deny that the growth rate continues to be positive and decent. And it can only get better, albeit at a slow rate.

On the other hand, there is hope. Hope that if the political turnmoil settles down, economic reform and progress will accelerate. So this picture should lay the ground for your strategy in the coming week. Yes, politics can distract for a short spell, but market will soon recognise the ongoing undertone in economic activity.

That would not leaveany great room for the Sensex to move down. If that is the assessment, then the smart trader can only use the turmoil to his advantage, without being overawed by it.

My advise is: medium term investors should not book losses, on fundamentally strong and growth shares.

Ofcourse, you should square off those in speculative highs and can well prepare your list and levels for short selling, covering and squaring. As the Army Brigadier, start preparing your war plan. There is no need to be overawed by the political turmoil.

The author can be reached at kseshadri@hotmail.com