Sensex may hit 29000 by June 2009
Like
Mumbaikars caught unawares by the recent spell of cold wave, investors have been
struggling to adapt to the recurring bouts of volatility on the bourses over the
last one month. But the weathermen of Dalal Street are expecting sunny skies by
the end of this calendar year. Five of the six participants at the ET Round
Table see the bellwether BSE Sensex between 20-22,000 then.
The panelists included Narayan
Ramachandran, MD %26amp; Country Head, Morgan Stanley; Pankaj Vaish, MD %26amp; Head
equities and fixed income, Lehman Brothers; Ved Prakash Chaturvedi, MD %26amp;
CEO, Tata Asset Management; Gaurang Shah, MD, Kotak Life; Rashesh Shah, CEO,
Edelweiss Capital; and Motilal Oswal, Chairman, Motilal Oswal Securities. The
session was moderated by Ramesh Damani, director, Ramesh S Damani Finance.
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Only
one participant, Ved Prakash Chaturvedi felt that the market was likely to be
around 18,000 levels on December 31, 2008. “But that does not mean that
mutual fund investors will not make money,†he
added.
Mr Ramachandran expects
a modest performance by the Sensex in the current calendar, but expects the
benchmark to touch 29,000 by June next year. Slowing corporate earnings is one
factor that most market watchers feel could hold back the market. However, the
ET panelists are not too worried about
it.
According to Mr
Ramachandran and Mr Vaish, interest rates are showing signs of slackening and
that could provide a support to corporate earnings over the next couple of
years. “These (recent outflow of FII money) are not big things…they are
just minor….India has attracted a lot of money and most of it came because of
the fact that India is an attractive destination for money,†said Mr
Ramachandran. “The real thing that will decide is where fundamentals are
going. I feel that they (fundamentals) are solid,†he
added.
Mr Shah felt that issue
was not about whether earnings will grow 18% or 12%, but about the rate at
which the Indian GDP would grow. â€If you expect corporate earnings growth
of 11-12%, it means we are looking at a GDP growth of 4.5 to 5 to 6%. But if you
expect GDP growth rate to be around 8%, give or take 200 basis points, then a
17-18% corporate earnings growth is not difficult. And I haven’t seen
anybody—Indian or global—question India’s 8% GDP growth
rate,†Mr Shah
said.
While foreign funds have
pulling out over the last few months, domestic liquidity has been a strong
pillar of support and this trend is expected to continue, feels Mr Chaturvedi.
“The kind of money we have seen that has flown in from the domestic
investors in the last one year is certainly heartening,†said Mr
Chaturvedi. “My guess is that if you combine insurance and mutual funds
and other (domestic) sources of inflows into the market, close to $2 billion of
fresh money is coming into the market every month,†he
added.
Mr Gaurang Shah sees
more investors tapping the stock market through Unit Linked Insurance Plans
(ULIPs), mainly because of the handsome returns these products have delivered in
the last four years of the Bull
Run.
He excepts inflows of
roughly $5 billion through various insurance schemes during the current quarter,
a significant portion of which will be accounted for by ULIPs.
“I think relative
disadvantage of insurance as a instrument vis-Ã -vis other fixed interest
products has come down, which is also because real interest rates have reduced
across the world over the last 10 years. So I see money continuing to come
in,†he said.
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