As the market tanked during the dark days of October last year, plumbing new depths almost daily, the fear factor overrode everything else. Greed had suddenly been consigned to the rubbish heap of history and fear had replaced it in double quick time. ‘Gora’ investors – FIIs and hedge funds – sold aggressively to signal a flight of capital, hitherto unseen in Indian equity markets for their sheer volume and ferocity.
Fear stalked one and all. And poor old retail investors, that hapless class which gets it in the neck most of the time, was left without its shirts. Even if they were directly not participating in the equity markets, their exposure through mutual funds left them debilitated. In all this, there was a very important side show being played out. A worried P Chidambaram (then Finance Minister) would use the first available opportunity those days to assuage the investor community, saying that the fundamentals of the economy were sound. For a while people paid attention, but in the face of relentless selling, even this voice was drowned out. So, the bull Chidambaram was trying his best to talk up the market, but the great bear of 2008, Shankar Sharma, would appear in the evenings on a programme titled ‘Tracking the Bear’ on CNBC-TV18 and make a mockery of all that the honourable (former) Finance Minister had said earlier in the day.
This carried on for a while, till the bear started winning hands down. And then 26/11 happened and Chidambaram was sent to manage Home, where he seems to be doing an admirable job. But this move left a void in the Finance Ministry, which meant that the only bull was out and the bears were trampling around the sand pit. With the hoi polloi losing interest in the market, the normal year-end wraps saw Sharma along with the usual suspects – Rakesh Jhunjhunwala, Ramesh Damani, Samir Arora and Co – giving ‘gyan’ on the channel, but I don’t think anybody cared anymore. And then came Satyam. Bang is all one heard – from D-Street to the Company Affairs Ministry – the sound resonated loudly. A couple of days back, Sharma popped up again on the telly, telling all and sundry that hell and highwater are going to be back.
His take simple – see newer and deeper lows by February-March. On Tuesday, the market didn’t pay attention and scraped past 9,000 all over again. But Sharma says, “The new low will be deeper than the last one. I expect it to retest 7,200 made in October and I see support at 6,000 for the BSE Sensex, but a sharp bear market rally could take it to 12,000-12,500 levels.” Saying that 2008 was a slam dunk year for analysts, he reckoned that 2009 would be tricky. “This is not a garden variety recession, but the closest thing to a depression,” he added.
What sounded even more ominous was when Sharma said that he didn’t see any empirical evidence to support a three-year recovery. I don’t see how the world will get out of jail, he averred. Good God, is this man the new Cassandra of Doom? For, if you track his forebodings over the last year or so, he has seldom been wrong. He also stated in this latest tracking the bear installment that one can make pots of money in a bear market. So, he is obviously entering and exiting the market at every rally and doing exactly that. But I have a more fundamental question. Yes, things are bad, we can see the signs all around us. Forget the markets, I am talking of the real economy, the one in which you and I live. It is in a shocking state of disrepair.
Should the oracle be believed? On October 13 last year, he clearly said that the Sensex could dip below 10,000. Unthinkable, but he was proved right within days. Let me remind you that at the beginning of last year, his call on the Sensex was 10,000 and sadly, he was proved right again. Now, I am not floating any conspiracy theories here. The reality is that the global financial monsoon is so severe that Sharma, like so many others with a bearish sentiment, has predicated his belief on what the tea leaves are saying, which is nothing but gloom and doom. You can also argue that in a democratic set up, everyone is entitled to his opinion. And Sharma has strong opinions. Sharma cannot trip the market, the global economic and financial meltdown is doing that. It doesn’t require any help. Markets tanked because foreign institutional investors and hedge funds cut and run.
No bear can trip the market any more, not singlehandedly, as in the old days. The tales of the legendary Manu Manek are just pages from the past. Who is Shankar Sharma? My question is why is his voice so important these days and why does CNBC-TV18 give him so much prominence? After all, isn’t he battering sentiment? Shankar Sharma, interestingly, is an expedient target. As head of First Global, he and his wife Devina Mehra, both ex-Citibankers and B-School grads, were held responsible for the infamous March 2, 2001, crash. Sharma had a substantial stake in tehelka.com, which went hammer and tongs after the BJP using a sting to expose ‘Defencegate’. Operation West End showing corruption in defence deals became a scandal of epic proportions. It even purportedly showed armed forces officers with prostitutes supplied by the website. Bangaru Laxman, then president of the BJP, got it in the neck for he was caught on tape with his hand in the till. Sharma was targeted by ED, tax authorities, stock exchanges and other government sleuths for his role in the Tehelka exposes. He owned 14.5 per cent in the website’s holding company, Buffalo Networks. Sale of HFCL shares, off-market transactions, circular trading were some of the charges levelled against him.
Sharma was even incarcerated during this time. How is it that seven years later the same man calls the shots on television channels? Why then is his viewpoint so important? On June 13, 2001, rediff.com carried an interview with him where he famously proclaimed – anyone who can kill the market by selling 100 shares of Wipro must be God. Accused of hammering down the market in the wake of Yashwant Sinha’s dream budget that year with insider knowledge of Tehelka exposes, he was even barred from trading for some time. Protracted legalese followed. In the same interview, he had remarked that no single individual, no single institution can suppress a market that is rising and vice-versa. The market is the arbiter of its own destiny, he had added. Sharma rode out the persecution and found his feet again.
Sentiment is a nice thing, for it allows individuals to delude themselves. When someone bungs in a monkey wrench, you are awakened from your reverie with a rude jolt. The person may be just narrating facts, but they sound like thunderbolts to one asleep, unencumbered by the vagaries of economic reality. Some people find Sharma arrogant and offensive. Why does he have to state the obvious? Why does he have to call a spade a spade? And why should biz telly land consort with him in this endeavour? The irony is that the BJP touted Sharma as the key conspirator to bring down the government in the Tehelka expose. But now his ‘truth serum’ is operating in an age where the then opposition is in government. Sharma surely has no motive, for we know where global indices are placed, we know the state of the ravaged economies and we know that governments are on the verge of sovereign defaults. Sharma is merely telling it like it is. And it sure ain’t pretty.
(Sandeep Bamzai is a well-known journalist who started his career with The Statesman in Kolkata in 1984. He has held senior editorial positions in some of the biggest media houses in three different cities - Kolkata, Mumbai and New Delhi - with The Indian Express, Illustrated Weekly, Sunday Observer, Dalal Street Journal, Plus Channel where he ran India's first morning business show on Doordarshan, The Times of India Group, Business India, Hindustan Times and Reliance Big Entertainment. Starting his career as a cricket writer, he graduated to becoming a man for all seasons under Pritish Nandy, who he considers as the premier influence on his career. Since he studied economics at Calcutta University, Bamzai decided in 1993 to branch out into business and financial journalism. Familiar with all three media, he is the author of three different books on cricket and Kashmir.)