The Hindu Business Line : Stock markets are not overvalued: Survey

Majority of fund houses in the country feel the stock markets are not overvalued at current levels and they expect the frontline stock index Sensex to breach 12,000 levels over a one-year period, according to a survey by online stock broking outfit India Infoline.

In the short-term (ie, three-month period), some respondents to the survey felt that the Sensex will be range bound between 9,000 and 10,000 levels; whereas the others expect the index to settle between 10,000 and 11,000.

On Monday, the Sensex closed at 10,684.30, up 174.77 points or 1.66 per cent from Friday. Findings of the India Infoline `Fund Manager Survey', where 14 fund houses participated, were released here on Monday.

While 45 per cent of the respondents expect large-cap stocks to outperform, 55 per cent said mid-cap stocks are likely to be frontrunners during the period. However, there were no takers for the small-cap stocks, said the survey.

Another interesting finding in the survey relates to their expectations on equity funds.

Equity funds

Seventy three per cent of fund managers expect equity funds to generate a return of 10-20 per cent over the next one-year period while 27 per cent of the respondents are more bullish and expect these funds to give a return of 20-30 per cent over the same period.

An overwhelming 92 per cent of fund managers expect income funds to generate a return of 5-7 per cent over the next one year.

Only eight per cent of the respondents felt that the return to be in the range of 3-5 per cent, it said.

Among the sectors, IT and capital goods are the favourite sectors of fund managers and each of them command 30 per cent of the votes. Next in line is the banking sector with 20 per cent of the votes. This was followed by cement and auto sectors, with 10 per cent votes each.

On interest rates, 64 per cent of the responding fund managers said the rate would continue to rise over the next one year, whereas the remaining 36 per cent do not expect a further increase in interest rates.