The Indian bull has stumbled, but it's still on the charge

The potential of this burgeoning middle class has not gone unnoticed and India is attracting considerable foreign investment from companies setting up businesses there - $12.7bn in the year to March - albeit that that is only a third of the sums being directed to China.

It has also been attracting retail and institutional investors into the local stock market, a growing number of whom are investing directly or via country funds.

New Star will join them next month when it launches an equity fund in conjunction with Tata Asset Management, the fund management arm of one of India's biggest companies. This outsourcing is a further sign of the determination of New Star chairman John Duffield to address its recent performance issues by bringing in new talent.

But, as Sethi himself points out, even long-term bull markets like the 20-year Japanese one, which ended abruptly in 1989, had periodic shocks for investors. While the long-term indications are undoubtedly positive, investors in India, or any of the other emerging powerhouses, should be prepared for plenty of turbulence. A small exposure to these markets is advisable, but more cautious investors may prefer to do it through a more diversified fund. Aberdeen, First State and Neptune all have a good reputation in this area.

Small shareholders should demand their rights

HBOS, the Halifax and Bank of Scotland group, has joined Royal Bank of Scotland in asking its shareholders for money through a rights issue and many commentators think that Barclays, Alliance & Leicester and Bradford & Bingley could follow suit.

Retail investors could be forgiven for asking why they should bother: banks' share prices have already fallen very sharply. HBOS stands at little over a third of its peak over the past year while RBS has fallen more than 50 per cent; both are warning that dividends will be cut and that they will pay the interim one in shares rather than cash. Neither makes any secret of the fact that the outlook is challenging at best.

Yet Gavin Oldham, chief executive of the Share Centre, thinks small shareholders should take up their rights. He says that issues such as these are very dilutive - that is, a large number of new shares will be issued. HBOS is offering two new shares for every five held; RBS's is an even chunkier 11 for 18. If shareholders do not take their entitlement, they will end up with a far smaller share of the company - and therefore of its future dividends. Selling at these currently depressed prices does not make much sense either, particularly if, as the companies claim, the rights will help them to manage their way out of their current financial problems.

While it may be tempting to sell your rights - each HBOS entitlement is currently worth around 200p, for example - it is probably better to take money out of your account and put it into their rights.

· Heather Connon's research trip to India was funded by New Star and Tata.