Dubai: Most of the Non-resident Indians in the UAE, who are on the sidelines, may use the current consolidation in Indian equities to harness huge opportunities over a longer term perspective.
“After a fairly good run-up over the last one year, markets are likely to consolidate at current levels. We are still positive over a longer term perspective,” Navneet Munot, chief investment officer at State Bank of India Mutual Fund said. There could some sort of correction. A few dips will be used by investors to increase their equity exposure, he said.
The benchmark Sensex may jump to 30,000 by March 2015, an upside of more than 14 per cent from current levels. said Yogesh Mehta, vice-president of Motilal Oswal, one of the biggest brokerage in India.
People should use correction to increase exposure to equities, analysts said.
Foreigners have boosted local stock holdings by $13.8 billion this year, the most among eight Asian markets tracked by Bloomberg. Franklin Templeton Investments and Goldman Sachs Asset Management joined Jeffrey Gundlach, the U.S. bond fund manager at DoubleLine Capital LP, in recommending the nation’s shares.
“The long term outlook is positive driven by political and macro environment, rising corporate profitability and with the overall support from foreign investors looking for exposure,” Munot said.
Narendra Damodardas Modi’s National Democratic Alliance came to power with a two thirds majority, in what was considered as a strong mandate after nearly three decades of coalition governments. The IMF raised its 2014 growth forecast to 5.6 percent from 5.4 percent and predicted Asia’s third-largest economy will expand 6.4 percent next year even as it pared its outlook for global growth in 2015.
If we look at other asset classes of other developed markets, or emerging markets, India looks relatively better in terms of returns. Even within emerging markets, given the slowdown in China and India is a big beneficiary of a fall in global commodity prices, Munot said.
Bullish on IT, exporters:
“We are bullish on IT because of higher growth projections, markets in Europe and United States are recovering,” said Mehta. Tech Mahindra and HCL are the best bet in the sector as there is “still more” upside.
The rupee has weakened 4 per cent since May 30 helping exporters of jewellery to services offered by IT companies.
Sensex company profits are likely to grow 24 percent over the next 12 months, compared with 17 percent for companies on the MSCI Emerging Markets Index. The Sensex has increased 24 percent this year, the best performer among the world’s 10 biggest markets, and is valued at 15.2 times projected 12-month earnings, compared with the MSCI Emerging Markets Index’s multiple of 10.8.
International investors bought a net $95 million of Indian stocks on Oct. 1, taking this year’s inflows to $13.9 billion, the most among eight Asian markets tracked by Bloomberg.
