New Delhi: Markets are as crazy as they ever can be, but leading market experts believe that the Sensex will trade in a wide range of 11,500-14,000, an upside in the range of 8-31 per cent from the current levels.
The unanimous view is that Foreign Institutional Investors (FIIs) are here to stay for good as India is expected to grow at six to eight per cent for the next several years and FIIs can’t afford to ignore Indian markets.
According to Ambareesh Baliga, Karvy Stock Broking, "The Indian economy and the markets are sturdier and are far from being written off due to the crash that we saw this last week."
However, this rosy picture would hinge on two main factors: on lower crude oil prices and a normal monsoon.
"The only factor of worry is the crude oil price. If crude oil price firms up more, then we may face a little bit of problem," said Gaurang Shah, Geojit Financial Services.
"The two main factors to be watched are how monsoon pans out across the country and that crude should not touch USD 85-90 a barrel," he added.
According to a research report on emerging markets, the Indian economy, Asia’s fourth largest, is likely to become the second fastest growing economy after China, said Rajen Shah, Angel Stock Broking.
FIIs are here to stay; 14 days of selling has not changed the India story
If the monsoons are good then the target of 12,700 will be achieved. FIIs will certainly stay here because the India story has not changed.
Only 14 days of selling does not mean that the India story is over. India is an asset club.
Economy will do well and if the monsoons are good then we are in for a good time.
A report (A foresight to 2020), which I read says that India will grow at six per cent for the next 15 years.
China would be growing at 6.1 per cent and India would be the second fastest growing economy in the world for the next 15 years, so why would FIIs ignore this kind of a market.
Net purchase/Sale (in Rs. Cr)
MFs
-5439.3
6522.68
589.20
3,088.42
4,482.94
7,571.90
-245.56
3,220.70
-1,172.29
12474.8
12676.19
* Till May 24, 2006
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SP Tulsian, Investment Advisor: My year-end target for the Sensex is 12,000; FII interest on India will be 100 per cent
ACC
My year-end target for the Sensex is 12,000. There is a fundamental change on the India story.
With the expiry of May Futures and Option, the market has become normal. Whatever damage had to happen have happened. I don’t see any problem.
Even if you factor in the FY07 growth of the Indian corporate, which is likely to be around 20-25 per cent, the market has become healthy.
I can always factor in about 15 per cent growth on the Index. FII interest in India will remain 100 per cent strong on the Indian markets. I have no doubts about it.
The whole problem that the market faced was till yesterday (Thursday which was the F&O expiry.)
Gaurang Shah, Geojit Financial Services:
Sensex to touch 13,500-14,000 levels by December end.
I foresee newer heights and the Sensex will touch 13,500-14,000 by December end.
Definitely the growth will be there. The story is still intact.
Factors to watch out for are firming of crude oil prices and the monsoons
The economic growth remains to be on the foreground. Inflation remains to be under control.
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The only factor of worry is the crude oil price. If crude oil price firms up more, then we may face a little bit of problem.
But I don’t think that will be something, which we will not be able to overcome.
The two main factors to be watched are how monsoon pans out across the country and that crude should not touch USD 85-90 a barrel.
FIIs are waiting to pump in money
FIIs are waiting to pump in money. We will see markets correcting even going forward. That is the time when you will see foreign money coming in. Those will not only be in the form of FIIs that are already there but also new ones who are looking at India and the growth story going forward.
The interest on the Indian growth story would be more
FII interest will be more. These are the people who make money. If you have huge investment in your portfolio you make money by buying at lower levels and selling at higher levels. The kind of maturity the Indian markets have shown is what has impressed FIIs. They are here to stay.
Yes, the markets are a little bit overbought. The PE ratios of the Sensex and Nifty are little bit on the higher side.
There are people who are looking at the Indian growth story. There is enough bottom fishing happening and we have seen that at the lower end.
If there is a growth story and if there is a scrip that has enough potential going forward, then its a buy.
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Volatility has to be there when the market reaches high levels
I don’t feel that one has to get shaken up with a fall of 1100 points.
Off course that is something, which we have never seen but we have also not seen a Sensex of 12,700.
When you see the Sensex at these high levels you have to face a little bit of volatility also.
Our markets are very much of the nature that when correction happens, it is very deep and fast and the rise is very gradual and over a period of time.
Markets to reach newer heights but over a period of time
This kind of volatility will be there going forward as well because the newer heights you reach, the more volatile a market becomes.
A lot will also depend on how the monsoon is setting across our country as most of our population is living in rural areas.
Markets should consolidate around 9,000-9,500 very strongly. It will bounce back and even reach newer heights but it will be over a period of time.
Rajen Shah, Angel Stock Broking: The year-end target for the Sensex will be 12,700
The year-end target for the Sensex will be 12,700.
I feel what the markets are seeing is a temporary phenomena and by December it would start talking about FY08 earnings and the earnings will be somewhere around Rs 785.
Markets not to fall to 9,000 levels
Markets will start discounting FY08 earnings and that time at 16PE and market at 12,700 will look reasonable and not overstretched.
I don’t expect the market to correct down to 9000 odd levels, which most of the people are talking about.
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Markets had become a money making machine
The run up had been too sharp and steep. Everyday it was like putting in Rs 100 and getting Rs 150.
It was becoming a money making machine. Had this not happened now it would have happened at 14,000 or so and that would have been much brutal.
It reacted at the right time and was expected. Every analyst was talking about correction from 8500 levels and now at 12,700 it was getting too much.
Markets are reasonably priced now
Markets corrected 2700 points from 12,700-9,900. Now the markets are reasonably priced.
We could see a low of 10,000. Anything below 10,000 will be a great buying opportunity. But I doubt that.
Deven Choksey, K R Choksey: By December 2006 PE discounting will go up to 17 times
Let’s put it this way. If we continue to grow by 15 per cent every year, and about which we are very hopeful for FY07, then the present discounting of Sensex would be around 15.7 times.
We believe that by December 2006 this discounting will go up to 17 times.
Sensex target for December 2006: Between 11,500-11,800
This would take the Sensex between a range of 11,500 to 11,800 by December 2006.
A PE of 17 now seems reasonable for the Indian markets for the current year with 15 per cent growth rate and assurance of the growth continuing for the years ahead at the same rate.
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I don’t see why India should not remain an attractive destination for the FIIs
Given the fact that India is widely expected to grow at a real rate of 8% GDP for the next few years and considering an inflation rate of five per cent, the nominal growth rate would be 13 per cent.
As we will be doubling the size of the economy in the next six to seven years, I don’t see why India should not remain an attractive destination for not only FIIs but for any kind of investors who would want a pie of this excellent growth story.
FIIs cannot afford to ignore this market
FIIs cannot afford to ignore this market. In the short-term, they might think that the Indian markets are expensive and other markets are not, but in the long run they will have to come back.
Ambareesh Baliga, Karvy Stock Broking: The India story is not over yet
The India story is not over yet. The current situation is due to the cooling off of an overheated market.
The next two quarters will reaffirm that the Indian growth story is on track. This will ensure a more sturdy and orderly growth of the Indian markets.
India still is and will continues to remain an attractive investment destination for FIIs
India still is and will continue to remain an attractive investment destination for FIIs.
A lot of funds, which were waiting to enter India, would have been put on hold due to the sudden nervousness and crash in the Indian markets.
Indian economy and markets are sturdier
Unlike some of the other emerging markets, the Indian economy and markets are sturdier and are far from being written off due to the crash that we saw this last week.
Sensex target for December 2006: Between 13,000-13,500
By December 2006, the Sensex should trade in the range of 13,000-13,500.
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