Things have clearly taken a turn for the better with the Sensex rising by nearly 900 points to 4,118 in the last three months, badla business going up by nearly 500 per cent, and the number of daily traded scrips increasing from 1,500 to 2,000.

Marketmen are now hopeful of the return of retail investors without which the capital market cannot stage a major recovery.

The rise of the Sensex itself was dramatic in recent months. The fancied index has shot up from the 1998-low of 3,209 (registered in January) and closed at 4,118 on April 10. Several shares in the A and B1 groups of the Bombay Stock Exchange have recovered from their all-time low levels. This is notwithstanding the poor performance of many industry segments and leadingcompanies.

The carry-forward business (badla) has also recorded a stellar performance. When the market regulator SEBI relaxed the badla norms last year, the carry-forward business was roughly around Rs 125-150 crore on the BSE. Now the figure has gone up by over 500 per cent to Rs 1,100 crore following a Rs 300 crore jump in the business last week. This has also boosted the business volume on the BSE.

Yet another reason for the rise in turnover was the BSE move to expand its trading system (BOLT) to other cities like Calcutta, Pune and Ahmedabad. Seeing the writing on the wall, now brokers of the National Stock Exchange (NSE) are demanding introduction of badla business. During the recent bull run, turnover of BSE has almost doubled from the average daily turnover of Rs 800 crore to Rs 1,686 crore. NSE, on the other hand, is still maintaining its Rs 1900-2000 crore turnover.

The third factor which indicates the return of retail investors to the market is the rise in number of traded shares from 1,500 toover 2,000 on the BSE. This number is expected to go up further as many companies will announce book closure and working results. Investors will have to trade (buy/sell) in a particular share if he is not willing to transfer the share in his name. Otherwise the previous holder of the share will get all the benefits.

BSE officials also chipped in with shrewd steps to boost volumes in thinly traded shares. The exchange's move to remove circuit filter (the system whereby trading is suspended when the share price shows excessive volatility) in the case of scrips quoting below Rs 10 also helped many dud shares to cross the face value. This is significant as over 3,500 such scrips were listed on the BSE in the last three years. Most of these shares have been quoting between Re 1 to Rs 5, much to the chagrin of investors who put money in such companies.

The return of stability on the political front has been the main catalyst which boosted the capital market in the last two months. The markets were severelyjolted when Deve Gowda and Gujral governments were thrown out last year. To worsen things, the reform process also got stuck in the coalition party politics.

Now there is expectation among brokers and investors that many of the pending measures like the new Companies Act (which includes buy-back of shares), Insurance Bill and a clear policy on foreign investment will be taken up.

``The market is now eagerly waiting for the budget. We expect measures to protect domestic industry from dumping. This is the reason why scrips of several companies which are suffering from dumping have gone up. The new finance minister Yashwant Sinha has also welcomed foreign investment. That's why MNC scrips have shot up in the last one month,'' said a senior institutional broker. Unlike the previous coalition government which was pulled in different directions by right and left parties, punters don't expect current coalition partners to scuttle or slow down the reform measures. Foreign institutional investors (FIIs) are stillinvesting in Indian markets.

Marketmen are no longer complaining about the depression in share prices. Only a recovery in the stock markets will revive the fortunes of the primary new issue market which was reeling under the impact of a 75 per cent fall in the amount mobilised (from Rs 11,648 crore in 1996-97 to Rs 2885 crore in 1997-98). However, experts say more needs to be done. SEs and SEBI should together work out proposals for recovery and bring back retail investors. Measures like fortnightly settlement for the cash group shares, buy-back of shares and more bank finance for investors and brokers will go a long way in reviving market fortunes.