The Hindu Business Line : Anand Rathi bullish on Sensex, sees 10,500 mark by December 2006

EVEN as the BSE Sensex touched the historic 9,000 mark on Monday, the leading stockbroker, Mr Anand Rathi, said he is highly bullish on the Indian stock market. He predicts the Sensex to be stable at around 10,500 points by December next.

Of course, the index is expected to move between 9,000 points and 12,000 points during the next 12 months, he said.

Not overpriced: Addressing newspersons while inaugurating his regional office here on Monday, Mr Rathi viewed that the Indian stock market is not at all over priced at present. The country's economic fundamentals are very strong now and the corporate profitability doubling during last fiscal supports well the market's existing P/E multiple at around 17. Further, it compares well with the China's market P/E multiple of 25 backed by higher GDP levels, he said.

"The P/E multiple of the Indian stock market was 56 at the time of Harshad Mehta episode and 36 during Ketan Parekh's time. While viewing that the existing P/E multiple of 17 is quite justifiable, I am, however of the view that P/E multiple of the market going above 20 at the current GDP growth level is unrealistic," Mr Anand Rathi said.

FII fund to continue: According to him, the country has become the preferred investment destination for the foreign institutional investors (FIIs) over the last five years and the situation is likely to continue for the next decade and above.

"Already, the share of agriculture to our GDP has come down to 20 per cent from the earlier level of 50 per cent. Our economy is not over dependent on agriculture anymore. The contribution of services sector to the GDP has been significantly growing. As long as the GDP growth is maintained at 8-9 per cent and corporate profitability growth at 15-20 per cent, the Sensex can reasonably grow by 15-20 per cent per annum," Mr Rathi said.

Mr Rathi said three major factors would contribute to the India success story. These include growing young and earning population, increasing consumption patterns fuelled by low interest rates and rising level of exports and forex earnings.

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