Indian Equity Markets (Expectations FY’11)
Equity market rallied in FY’10 from a low base under recessionary pressure and marked a 80% growth. Repeat of this is not going to happen as new FY anvils today on April Fools day. We generally expect following in broader sense.
1. Severe inflationary pressure on both CPI/WPI leading to more liquidity tightening by Central Bank (RBI). CRR hike, Rate hike a surety – first installment of this will be seen in April Credit report itself. Expect Home loan rates to jump to 9% level hitting Auto, Realty and Auto Sectors.
2. Rupee strength will impact IT and a further appreciation of around 5-10% in INR is not ruled out. See Rupee consolidating at around 40-42 levels by Year end.
3. Obama adminstration legistalation on Outsoucring will be a dampner for service and outsourcing industry. Federal reserve will tighten liqudity only in June-Sep quarter.
4. Disinvestment of big PSU’s – SAIL, CIL, even likes of ONGC is expected.
5. Oil prices will move from existing $80 to around $100-$120 levels.
6. India growth mainly on account of liquidity tightening and commodity price upward move will be a modest 7.5% rather than a 9+% levels.
7. Monsoon after a bad winter is generally bad and Agriculture will suffer. Fertilizer prices to soar.
8. Banks will consolidate more – Loans expensive, No expansive move, Interest rate for fixed deposits just a notch up. NPA to fall further. M2M losses for some leveraged Bank assets will increase by second half of Fy11.
9. Reliance – ADAG court case will be no – issue type of decision. NTPC will be a gainer and there will be something on plate for both Reliance and ADAG on table.
10. Retail will continue to be underinvested in this market.
11. Market from current level of 5300 will see around 10% of crash before it moves beyond 5500 levels. See Nifty ending at around 5700 at Fy11 end.
12. Bharti, Reliance Comm will be major bagger of 3G licenses. Vodafone and BSNL the also ran category.
13. Tata House will be stronger – TELCO, TCS, TISCO et.al as always will be the most solid place to be in.
14. Some bold moves by GOI – Beginning by some small portion of Ketan Parikh report implementation.
15. Bharti, Reliance, Pharma Stocks, DLF, L&T, Reliance Comm, IFCI, ONGC will be better place to stay invested. IT might correct in wake of Rupee strengthening.
16. Investor should remain cash rich in first half to buy blue chips at lower level and should be invested in second half.
News out of US expected.
1. Hawkish policy.
2. More pressure on US CAD.
3. Deep Republican – Democrat divide.
4. Severe pressure on unemployment
7. Oil moving northwards.
8. Govt spending in social sector to grow.
9. Banks will come up with better numbers.
10. Citi group outperformer.
Posted: April 1st, 2010 under mY wEbPaGe.