The Hindu Business Line : Sensex may see a 13-24 p.c. correction: CLSA study

THE CLSA research team in its latest study on the stock market has come up with a view that the Sensex, the domestic benchmark, valuation is still reasonable.

However, it is of the opinion that the current rally has not seen a significant correction. "The first significant correction (when it occurs) is likely to take the Sensex down 13-24 per cent and set up another good buying opportunity."

The recent study of the CLSA Asia-Pacific Markets group for its professional and institutional clients pointed out that during the present rally since last May, the Sensex had seen the sharpest correction at nine per cent.

CLSA's global technical strategist, Mr Chris Roberts, noted: "Since the May 2003 low, there have been several setbacks varying from 5-8 per cent." In its journey, from a low of 2904 in last May to 6250 in January, the Sensex rallied 115 per cent.

He observed that CLSA team would favour a new high of the Sensex above 6250 points before an important correction. The Sensex, he felt, was now in an overbought zone. But, expected that the index eventually would move to the 8000 points level.

The study placed the Sensex PE multiple at 16.9 and dividend yield 1.9 per cent for 2003-04.

The study considered the outcome of the forthcoming general elections would form the single most important factor to influence the stock market this calendar year. If India gets a stable coalition at the Centre, markets will view it as a big positive. Otherwise, market valuations are likely to come under pressure.

It felt that the commodity prices, and exchange rates would be other key variables, which might have a direct bearing on corporate earnings and consequently on equity prices.

Domestic investors, the CLSA study noted, seemed to have been gradually coming back to equities, but net inflows still remained "lacklustre". India strategist Mr N Krishnan observed: "If this picks up, then markets will remain well bid, from a liquidity perspective."

More Stories on : Stock Markets | Stock Markets

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
ITI questions MTNL contract to Huawei

UTI ready to gobble big MFs

Some say `fairness opinion' on share valuation unfair

Sensex may see a 13-24 p.c. correction: CLSA study

Govt to take a relook at FII investment in news channels

What's special about a mutual fund IPO?

ICICI Bank plans equity issue for Rs 3,500 cr

Simply South: Dynamic, wholesome brands catch fancy