Mumbai Analysts expect a positive opening for the markets on Monday and advice investors to stay invested and stick to frontline counters.
According to SP Tulsian, Investment Advisor, valuations have taken extraordinary beating and there are fundamentally good companies available at attractive valuations. “A sector specific search is going on,” he said.
S P Tulsian, Investment advisor: Markets are likely to be good next week
The markets are likely to be good next week. I don’t see any problems in the markets next week as all the uncertainties are behind us now. In fact, the confidence and positive mood has revived now and investors are once again keen to invest in the Indian equity markets.
Valuations have taken extraordinary beating
The consensus is that valuations have taken extraordinary beating and there are fundamentally good companies available at attractive valuations. A sector specific search is going on.
Investors should take a sector-specific call
Investors should take a sector-specific call now. I’ve been bullish on real estate, hotels, capital goods and electrical equipment maker companies. The BSE index could be sideways for a while but not go below 11051. The support is 11081. The trend is up. Go long on the market with 4% stop loss for a 15% gain.
Sachin Chavan, Technical analyst: The markets had given a bullish breakout last week
The markets had given a bullish breakout last week itself. Thereafter they moved up this week in line with the upward trend. Some of the stocks that led this rally are getting into the overbought zone now.
Upmove can slow down next week
Next week perhaps one can see a slowing down of the up move, which was seen on Thursday and Friday this week.
Major correction not expected
However, a major correction or sell off is not expected going ahead. Though some profit booking is expected at higher levels it is not likely to damage the up trend.
Serious profit booking can be seen at 3480 levels; 3100 is a good base
For the Nifty 3400 is the major resistance and 3480 is the level around which some serious profit booking is expected and correction can take place. On the other hand, 3100 is a very good base and can act as a good support on the downside.
Investors should continue to stay invested
Investors, on the other hand, should continue to stay invested and stick on to frontline counters. Midcaps and smallcaps that have eroded, say, 50% of their value and if those are now bouncing back by say 10-15%, should not be looked at for investment by long-term investors. This strategy should pay off.
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Sumit Rohra, Antique Stock Broking: Resistance level for the Nifty at 3382
Markets are going to open up on Monday. For Nifty the resistance level is 3382 and if it crosses that then you will 3493 and ultimately my target for Index is 11,303 and this could be reached by January.
Crude has broken a very strong level of USD 73 and it going below that is a very big positive because it had gone into an intermediate downtrend. Once crude comes to USD 65.5 and if it breaks that then it will go down very sharply.
The BSE index could be sideways, but not go below 11,051
Go long on the markets. The BSE index could be sideways for a while but not go below 11051. The support is 11081. The trend is up. Go long on the market with 4% stop loss for a 15% gain.
R Sukumar of Franklin Templeton:
Continued interest in quality names
Going forward, one will see continued interest in quality names, whereas there is going to be more volatility in some of the stocks, which are not going to see a wide spread interest.
Earnings growth in India have exceeded nominal GDP growth rate
Typically earnings growth in India and most other countries have exceeded nominal GDP growth rate. The current real GDP growth rate is around 8% and if one assumes an average inflation of 5-6% then 13-14% could be the nominal GDP growth rate and we think that earnings growth is going to be in excess of that. So I think the optimistic scenario would clearly be 15% plus earnings growth for next 10 years, pessimistic would probably be close to 12%. The most probable scenario is somewhere in between, so the market is still factoring in 12% earning growth and that could be an upside to that.
India would gain, as it is more of a domestic story
Outlook on global equities can change and when it changes it could create volatility in all markets. So in long to medium-term, I would say that India would gain because it is more of a domestic story and the global linkages are not that strong. Domestic consumption could still keep GDP growing at a fairly good clip.
In next 30 years, biggest economies are going to be in Asia
In the next 30 years if biggest economies are going to be in Asia, obviously things have to change very dramatically. So in long-term, we are clearly going to see asset shift from developed world to some of the emerging countries including India and China.
Nilesh Shah of Kotak AMC:
Upside on the short-to-medium term would be limited
It is hard to justify a buy on any individual ideas based on FY07 earnings. Clearly on that perspective the upside on the short-to-medium term would be limited and will be more a function of liquidity. But having said that it is a question of just one or two quarters before the street starts building-in expectations based on FY08 earnings
Not too much downside from here
We don’t believe there is going to be too much of a downside to this market because I don’t think the extent of overvaluation in this market is overdramatic. Probably six months down the line everybody would begin to factor in FY08 earnings.
So, one does not expect huge corrections or huge crashes although maybe you will have small corrections. In addition to that, there are lots of global investors sitting on some amount of liquidity. So any kind of positive noises from global monetary policy markers could lead to some kind of increased allocations towards equities, which could bring more liquidity and also actually be an important support to this markets, whenever those small corrections happen.
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