BOMBAY, 19 November — As per the calendar, Dec. 31 marks the end of the year, right? This is true the world over but for the Indian stock markets, it is not Dec. 31 but Diwali which ushers in the New Year.

This year for the stock markets has been particularly very painful. There have been more downs than ups. The benchmark BSE Sensex crashed to a 7-year low and touched 2,595. When compared with last Diwali, the Sensex has shed 667 (18 percent) points.

First came the scam unleashed by street smart broker, Ketan Parekh. Before the markets could recover from that, the US-64 imbroglio struck once again.

And the already tethering market was further pushed to the brink by the terrorist attacks in US. The Indian economy as such was down and now with the world economy also getting into a recession, it seemed as though there was no hope. The positive in all this was that for once, India was stable politically.

This year also saw a change in the stock preferences, there was a marked change in sentiments. IT stocks took a backseat and the Old Economy stocks were back in the limelight. The charm of softwares seemed to have worn off.

Lower earning expectation from US had a negative impact on the software stocks. Most of the heavyweights tech stocks like Infosys, Satyam, Wipro and Digital issued profit warnings and thus most of these stocks fell to over two-year lows while the second-rung software stocks like DSQ Software, HFCL, Aptech, Hughes Software, Sierra Optima and Rolta, fell to all time low or over 3-years low.

On the other hand, things seemed to have turned around for the Old Economy stocks which till now had been relegated to the background. Pharma stocks mainly, domestic pharma stocks were the winners of the year. Dr Reddy’s touched an all time high of Rs.1150 followed by Cipla, Ranbaxy, Morepen Labs, Wockhardt, Wockhardt Life, and Glenmark. Auto & auto-ancillary stocks saw some buying interest. Cement stocks mainly in the frontline counter like ACC, L&T, Gujarat Ambuja, Grasim and India Cement were volatile. While media, telecom FMCG, power, engineering, biotech, chemical & fertilizer, hotel and metal stocks reeled under intense selling pressure.

And as usual this year also saw buying in public sector undertaking (PSU) stocks , as there is eternal hope that the government’s disinvestment process would finally take off. CMC, Balco and Hindustan Teleprinters were among the major disinvestment’s made by the government. Contracts for six hotel properties of ITDC were also awarded on the last day of the year.

Another major development of the year was in the big industrial houses. Big guys like Tata Group, Aditya Birla Group, Reliance and Godrej were badly affected. Reliance slipped significantly to Rs.268, which is below the buyback price of Rs.301 per share. Tisco suffered hefty Q2 losses.

There was also some consolidation seen in the India corporate sector in the form of mergers, acquisitions and share buybacks. And the most significant ones to consolidate were Raymond, GE Shipping, Siemens, MICO, Carborundum Universal, Finolex Cable, Jayshree Tea, Sterlite, Reliance, Kesoram Industries, Bajaj Auto, Carrier Aircon and Glaxo-Smithkline among others.

It is said that there is always light at the end of the tunnel or better still, dawn breaks after a spell of long dark night. Infact most are of the opinion that things have reached such a low level that it could not possibly go down below this.

Currently, the FIIs are selling in the Indian markets as the year end, the Dec. 31 one, is nearing and they have redemption pressures. The selling was more due to the immediate effect of the terrorist attacks in US. Sentiments are still uncertain but it is expected that things will slowly but surely start getting back on track. Though most of the economies of the developing countries have suffered a setback, comparatively, India is not as badly affected. It is more stable than the rest.

IT stocks have now scrapped the bottom and most of these stocks have discounted the profit warnings and slowdown. So maybe investors, especially the retail investors who seem to have returned with a vengeance, will shop around for "value buys". Also, the introduction of stock futures coupled with the fact that market movers like FIIs are allowed to trade in the derivatives segment should light up the Indian markets.