Highly Inflammable

Many analysts are, all the same, hopeful that all is not lost and there could be a silver lining in the horizon. Says Chakraborty: "Based on our Q1 2008-09 preview, it looks like numbers, although slowing down, are still decent, and no negative growth will be there...the actual test is in Q2 2008-09, where we will see the effect of high costs of borrowing and doing business playing out."

Referring to the last bear market between February 2000 and July '03, totalling 42 months, when the market fell until September '01 and remained in a trading zone thereafter, Chakraborty feels that even at present levels, the risk reward will be favourable to investors. Concurs Kejriwal: "Corporate India is at 12 multiples of the current year's earnings. So it is neither cheap nor expensive to invest at this level." Yet given the drop in the market, the global fund manager has a tendency to book profits.

The real estate sector has been one of the biggest losers as realty stocks, once considered lucrative, have been among the worst sufferers. Also, mutual funds, which have retail and company investments, have also taken a beating. This, experts say, has been because most mutual funds normally invest in the top 100 stocks, which have been at the receiving end of the current bear hammering.

So, where does the retail investor go? Says Vikram Kotak, chief investment officer, Birla Sun Life Insurance: "For the retail investor, this is a good time to buy. Those already in the market should stay invested for a 2-3 year time horizon and not try to time the market." However, analysts feel that investing in debt or fixed deposits is not a good idea for the medium to long term as yields are less than inflation. Adds Aggarwal: "In an inflationary scenario, retail investors invest in gold, real estate or the capital markets. Since gold prices are already very high and real estate is yet to come down for the retail investor to get in, capital market is still the best area."

One thing is sure. All those investors who felt cheated at having missed the spiralling growth earlier can now take a chance to buy stocks which might have seemed out of reach and at that time wait it out for the next rally.