CA by profession, Retired MNC senior manager, staff college visiting faculty, portfolio manager, equity research analyst, newspaper columnist, student of stock market for 4 decades... fond of classical music, cricket & an itinerant traveler.

================ PERSPECTIVE ON THE MARKET : AN UPDATE=================

Indian economy is not likely to be in recession and is substantially different to the rest of the world. We are domestic consumption led, and we have several infrastructure projects that are fast tracking the economy. Our agriculture growth is pathetically low at 2% and several initiatives are being taken to improve irrigation, storages, e-chouppals, financing options and marketing windows for farmers which is expected to push agriculture towards 4% growth.



There are far too many activities underway which by their momentum will push the economy into atleast 7% growth. In fact, most economists are confident that we would report 7.5% to 8% growth y-o-y for the next three years.



Corporate results will necessarily demonstrate revenue growth of around 22-23% and profits are likely to be not less than 18% on average.



Of course, our momentum would be marginally affected by global slow down. We will have contagion effect tangentially but get moderated by the developing growth story.



Seen from the perspective of fund managers in US and Europe, India would be accelerating as compared to their own slow progress. They will bring liquidity to India soon and improve the sentiment. My reading is they will wait for some stability, and as consolidation starts they will be into India cherry picking quality scrips.



Hence, I believe our markets will recover faster than western economies.

March 17, 2008




================ PERSPECTIVE ON THE MARKET : AN UPDATE================



My reading of the medium term trend is:



ONE: The present level of sagging market with low volume will continue for few more weeks (say 6 weeks). News flow will add to the pain and panic, and will keep the market highly volatile. The truth is not yet out in US and in China the market will slide keeping the undertone weak. In the meantime, commodities will provide some shocks.



During this period, the indices will sag because of the global fears while Indian fundamentals could get ignored. When sentiment is weak, fundamentals will have no value and liquidity will disappear.



TWO: Next stage will involve a few months (say, 3-4 months) of consolidation, when there could be selective buying, and lack of interest amongst the retail investors. Smart money will buy into quality scrips. You might get Reliance Industries at Rs.2050-2100 and ONGC at Rs.900-925 between April and June 2008.



The consolidation process will be helped by the fact that almost all bad news would have been digested. Corporate results would be better than expected, and arrival of monsoon would provide the impetus.



THREE. Around July-August, we are likely to have an uptick, primarily because Indian EPS will be robust as compared to the rest of the world. When the PEs and indices climb, we could see stampede, both from FIIs and domestic players amongst A group scrips and large market caps. Retail participation could take entire table upwards.



FOUR. Hence, my suggestion that we hold our savings now and wait after we see the Q4FY08 results and the level of confidence the managements show in April. We must await the process of consolidation.



Investing should start when some stability is seen in the market and the outlook appears to be promising. Market will especially want to know, around the Q1FY09 results time, whether the BSE index EPS for FY09 is at Rs.1025.



Invest when the market tends to consolidate. You will get your favorite quality scrips at attractive prices, around 14500-14800 levels.

March 16, 2008