WEST PALM BEACH, Florida (HEDGECO.NET) – 2003 ended on a sound note in India as the Indian Stock Exchange in Bombay closed up 1.88 percent at 6,026.59 points. The intra day high was 6034.38 points,about 100 points away from its life intra day high of 6150 points reached in the month of February 2000. The market capitalization of Indian stocks has doubled to US$280 billion during 2003. Suchperformance comes as investors expect good earning figures, the earning season being just around the corner. The rally was broad- based; however, the oil and gas sector led the way.

The growth in the Indian Stock markets undoubtedly helped boost the Indian economy to one of the fastest growing markets in the world. During 2003, the Bombay benchmark rose by an incredible 72%, pushing the Indian market to the number two position as the best performing market in Asia. Commenting on the Indian market gains, Raamdeo Agrawal, managing director at Motilal Oswal Securities said, �The most exciting phase is still ahead�.

Hedge funds, which have traditionally followed the money trail and market action, are not very far behind. During the 2003 session, total hedge fund assets flowing into the Indian market was about US$ 2 billion. Dharmesh Mehta, head of equities with Enam Securities said, �Around 40 to 50% of the overseas money flowing into the Indian market is through participatory notes, and most of it is coming from hedge funds�. Although the Indian authorities continue to modernize its regulatory laws over hedge funds, leading to some positive laws, hedge funds are still a cause for concern not only for the country�s stock markets, but also for the securities and Exchange Board of India [SEBI].

Unlike traditional mutual funds, which rely on a �buy and hold� strategy, hedge funds move in and out of markets in anticipation of changes and market imperfections, hoping to take advantage of such opportunities. It should be noted here that hedge fund strategies are perfectly legal, but emerging markets such as India or Malaysia have always viewed them suspiciously.

During the previous Asian financial crisis, the former Malaysian leader, Dr. Mahatier Mohammed charged that George Soros and other hedge funds were responsible for the financial crisis facing his country, as well as other Asian countries. However, an IMF investigation into the matter, cleared hedge funds from contributing to the crisis. Expect increasing hedge fund activities in India during 2004, no one should be surprised to see total hedge fund investments in India reach US$4 billion mark.