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Summary of Contents
MARKET
OUTLOOK
Setting sights on
16000
We expect the markets to reach
15500-16000 within the next twelve months. This appears a reasonable
target given our expectation of a robust growth in corporate
earnings, a positive Union Budget and benign global macro factors
especially a possible rate cut by the US Federal Reserve (Fed) in
mid-CY2007. With the global growth rate likely to moderate,
inflationary pressures in the USA should ease in three to four
months. India would continue to grow at a robust rate though and
thus attract good foreign funds in line with the other emerging
markets. This would lead to strong liquidity conditions and money
supply will continue to grow at 19-20%. In this issue of Market
Outlook, we have analysed the various positives and risks associated
with our equity markets in the coming year. Our preferred sectors
are those that are driven by domestic consumer demand and capital
spending, and therefore are relatively insulated from a US slowdown.
Thus sectors like automobiles, banking, capital goods and cement
continue to remain our preferred bets .
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