The Hindu Business Line : HDFC Securities sees Sensex growing 15%

Making a presentation here on Monday on the `Outlook for 2006', Mr Sunil Shah, Managing Director, HDFC Securities, said the company was bullish on the 12-month outlook, betting on various factors, including the robust growth of the economy, stable interest rates and earnings growth of the companies. "India's GDP growth should be at eight per cent in fiscal year 2007, mainly led by industry and service sectors. Manufacturing and service sectors should grow between 8-10 per cent. Growth is creating consumption led domestic demand," he said.

Further, the BSE Sensex is trading at a reasonable one-year forward price to earnings multiple of 15 and earnings growth is expected to be 15-17 per cent in 2007 financial year. He said the Indian companies are expected to grow at a higher pace, compared to other countries in the region. "As a percentage of GDP, the Indian market cap is relatively lesser than the other Asian countries."

Another attractive feature of the Indian stock markets, according to him, is its size. At $0.6 trillion, the Indian market has achieved a size that is attractive to the foreign investors.

The number of companies with more than $1 billion market cap has grown to 83 from 25 about three years ago. About 300-500 companies have a market cap of $500 million.

With domestic investors, who are also expected to increase their exposure to the equity markets, the markets are poised for growth over the long-term.

Making a case for investing in Indian markets, Mr Deepak Jasani, Head, Retail Research, said correlation of India with the US and the world was on the lower side and the growth rates expected in India's GDP and corporate earnings were higher than that in other countries. "India is one of the least geared economies to global growth in Asia, as private consumption accounts for 67 per cent of GDP and exports only 12 per cent. Indian markets are getting immune to monsoons, political changes, temporary slowdown in FII flows and slowdown in global economy," he said.