Nearly a decade ago, when technology stocks were hot and developing countries were not, a money manager calculated that Intel Corp. was worth as much as all the publicly traded companies in India. He thought that a little ridiculous.
In recent years, as any investor in either India or Intel knows, tables have turned. Since the end of 2003, Intel investors have lost about 40 percent of their money, while those in India are up about 80 percent.
As capital has flowed in, there have been periodic warnings that speculation might be getting a little out of hand, but those who paid attention to such warnings have always lost out.
At least until this month.
From May 10, when the Bombay Stock Exchange 100 index peaked at 6,554.71, through May 22, the index plunged almost 18 percent, to 5,382.22. It then bounced back a bit, reassuring those who recall that the last time it sold off that rapidly, almost exactly two years ago, was in reaction to a surprising election result: the Congress Party, in coalition with leftist parties, took over the government.
Since then, that government has won the hearts of foreign investors, and growth has been rapid. Along with China, India has been the most exciting country for foreign investors.
And its stock market, unlike that of China, has been viewed as a reasonable place where quality companies can be bought and sold. China's market, which has burned investors too many times and does not even list the country's best companies, has done poorly.
Eric Fry, the money manager who spoke about India and Intel at a conference sponsored by Grant's Interest Rate Observer in early 1997, is now a hedge-fund manager with Solstice Advisors. When asked this week if he still owned Indian stocks, he said he did not.
"Back then, you had a market that was truly undiscovered and ignored," he said. "Now it is anything but. Fundamentals are still terrific, but the stocks have had a big run."
U.S. Treasury data, as compiled by Bank of America, indicates that Americans put nearly $12 billion into Indian securities last year, far more than in any previous year.
Joseph P. Quinlan, the bank's chief market strategist, notes that developing markets in the past have tended to plunge after big increases in U.S. purchases.
Moreover, the Indian stock market's rise since late 2001 is similar to the rise in the Nasdaq composite to its peak in 2000, although the decline since that high has been a little more rapid.
Shri P. Chidambaram, India's finance minister, pointed out that many markets around the world suffered this month, some worse than India, and he said that "for some time now, experts have been suggesting that a technical correction of the market was unavoidable."
Chidambaram also blamed margin calls for forcing some speculators to sell. But he said there was no reason to worry.