The FIIs and institutions indeed started getting back into buying mode in select stocks. Hindalco continues to excite both traders and investors, as does Sterilite. The SBI counter surprisingly kept up the momentum.

But there is a flip side to the story. Look at what happened on Thursday. Bluechips like Gujarat Ambuja Cement, MTNL and a few others saw downloading in volumes with prices sharply dipping. Even Glaxo came under the hammer. This kind of sporadic breakouts of nervousness sends achill down the investors' spine.

For, if a group of market players are unloading important pivotals, it ought to have some meaning. The meaning is not apparent to others. When a sell-off occurs in volume, one cannot dismiss it as a shake-out of weak holders. One would start suspecting preventive downloading by FIIs. And the earlier net sales figure of FIIs should have added to this concern. The sell-off could also have been the result of unloading of built-up inventories by operators.

The important thing is that it happened in important pivotals. And the investor can afford to ignore such signals only at his own peril. But look at what happened the very next day. Glaxo and Ambuja climbed back sharply in the opening. So that puts a big question mark: Has the market turned pranky? It is in the same market that investors are not letting grass grow below their feet, when it comes to Hindalco or even SBI.

Many fund managers have expressed the view that the risk on the downside is limited. On the other hand,the market is waiting for Kargil to be over, so that it can spurt up. The spurt is very likely, given the buoyancy in the economic scene.

But certainly, the events of Thursday described above will make investors uneasy. Because even at the best counters, you could take a hit. So it has become essential for traders wishing to cut his risks and yet make some money even in the current market to analyse the background and come to some conclusions. Fund managers who have at their command huge funds may not feel this need, as they can always leverage their investment towards the future.

But for the sake of the small trader and the small investor, let me make an attempt at putting the problem in an analytical framework. Allow me to take this at two levels. First, the fundamental issue of what threat the Kargil situation poses. Second, how the market players interpret or react to this threat.

The Kargil issue has crystallised quite much in the last one week. It would appear that apart from using the nuclearcard, Pakistan is not positioned well for continuing this conflict. But we also see that the problem has acquired quite a new dimension.

The greater issue at the border is the emergence of a new Pakistan. It is now an amalgam of military hawks, and a potboil of internal politics. Pakistan's democracy has never been stable and the country has seen military dictators taking control of the reins in the past. And in any case, there is an intense love-hate relationship between the Army and the politicians. More importantly, the state has willy-nilly become the seat of anarchic military and fundamental forces, over which it may be difficult for any single individual, government to exercise control.

This is a totally new development for India. While India will have to figure out how it will deal with this for the long haul, investors will always keep worrying about what it means to their investment. Let us take a look at the underlying fundamentals.

It is clear that in future, India will have to be prepared tospend more on defence. Because while this conflict can end soon, like the two previous wars, India will have to be on the look-out against the Taliban kind of element. Fundamentalism and associated terrorism is proving to be a new challenge not only to India but to the entire world.

Realising the serious nature state-sponsored terrorism, some US senators have made the right move to keep the Pakistani government under check. Hopefully, this will pay dividends.

In any case, given the fragile nature of Pakistan's economy, one hopes that the world community will not allow state-sponsored terrorism to be supported. Especially so, since Pakistan has a nuclear bomb. So, the investor in Indian stocks, whether a domestic investor or a global fund manager, can certainly narrow down the contours of his problem quite easily. The Kargil issue will soon be resolved. In the worst case, it can result in a war. But the country has seen such wars before twice. The war cannot be a long one, and the issue will beresolved.

So that should not hold up investments. What is holding up the traders is that should the war break out, there is a danger of values dipping down. That indeed is a real danger. And in however I look at it, I am not in a position to write off this risk. Because scrips could go down by, say, 20 per cent to 30 per cent, before they recover. So it would make much sense to sit on cash right now.

But in the meanwhile, long-term investors are not letting things lie. You can see how Ashok Leyland tries to keep moving up. That is one example of long-term investment, unmindful of the immediate danger. And if you hesitate, you will lose out. Especially if the war never breaks out!But let me get back to the risk again. Take a look at the built-up volumes in many scrips.

A detailed analysis reveals that this risk is not small. And a study into the past pattern and on important dates like end November, 1998, March, 1999, April, 26, 1999, and so on show that traders can indeed sell in volumes. And shrewdbears can indeed make a killing. The conclusion all this leads to is simple. Sure, there is not much fundamental danger from Kargil. But the trading danger is indeed big. So it would appear that waiting and watching is a safer bet than being in a hurry.