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Rasheeda Bhagat

Mr T. P. Raman

IT is an extremely bullish viewpoint that greets the question on where the equity market is headed in 2004. Across the board, industry experts, equity analysts and stock market investors are cheering in the New Year with a huge green flag.

Mr T. P. Raman, Managing Director, Sundaram Asset Management Company, says that the northward direction that the stock market has taken comes on the back of strong fundamentals.

"The company results have been good, the monsoon has been good, most of the banks have got rid of their problems and cleaned up their balance-sheets, which are now looking very healthy, and companies which had not put out any expansion plans in the last three to four years, are now beginning to work on them. So we can look forward to a good deal of corporate expansion taking place in the coming months."

What is even more important, he says, is that at long last infrastructure growth is happening, and "a direct example of this is the Golden Quadrilateral project. The Government expects to complete the first lap of this project by December 2004, and it looks like this target will be met."

Other "healthy indicators" that he names include "an extremely healthy forex reserve and an extremely strong Indian rupee — at least vis-à-vis the dollar." Mr Raman feels these are all pointers to the fact that both corporate India and the country as a whole are poised for a good growth.

"So if the FII participation in the stock market is happening in a big way, it is happening on fundamentals and not anything else," he says.

He adds that while this is the growth phase, it will have to be followed by an investment phase. "So next will come investment-led growth, when a lot of investment will happen. If the Government is going to put big bucks in infrastructure and the companies are going to make investments, for the next two years, we will hopefully have a big period of growth."

So what should investors do at this moment in time?

"I feel that the retail investor, given the fact that his returns from FD and other debt-oriented instruments is slowly falling and, perhaps, not meeting his needs, and as he has also seen the volatility which the debt markets can provide, should look at equity."

He suggests that even those investors who are not willing to have a very long-term view, but are prepared to take a one or two year view, "should participate in this rally and try to improve their wealth. They can look at diversified funds, which are spread across sectors. So even if one or two sectors under perform, the other sectors make up."

Those investors who are a little wary of equity, could look at balanced funds; those even more wary, can look at monthly income plans which have only a token 15-20 per cent equity content. "But the bottomline is that an investor must participate in this equity market. Unless they distribute their asset in the form of debt and equity, they will not be able to meet their needs."

So is the individual investor back in the mutual funds?

"Oh yes, in a very big way," replies Mr Raman. "There is a huge retail inflow that is happening across the industry. I am able to see it in my own case and data from the broader market too suggest that there is very good retail inflow coming in."

He feels that there would be little institutional support for equity funds because institutions have their own rules and regulations. "Most do not invest; some may invest. So whatever support is coming is definitely coming from high net worth and retail investors."

Asked to give five picks for 2004, he said SEBI regulations did not allow him to talk of individual stocks. But as for sectors, he is very bullish on the infrastructure sector. "This will cover steel, cement and power shares. That sector looks very interesting to me."

Mr Motilal Oswal

Mr Motilal Oswal, CMD of Motilal Oswal Securities, Mumbai, is also "very positive" on the equity market outlook for 2004. "One of these is very strong corporate performance. We are seeing excellent quarterly numbers. Lower interest rate regimes have come to stay and this fact has been accepted as a reality. So, the equity market becomes an attractive option for investors."

He thinks that the unprecedented strong flows coming from FIIs can be attributed to "the strong growth in the Indian economy."

He does not think that equity valuations have already run up, making it dangerous for investors to enter the equity market at these levels. "For next year's earnings, we are still at a PE multiple of around 17. So I do not think that our stocks are valued on the higher side."

On the strategy one should follow in a bull market like this, Mr Oswal says, "First of all, investors must put their money into very good companies... both with sound management and sound businesses. They should not go into poor quality stocks."

With anything and everything going up in the present scenario, he cautions equity investors to be "really careful in terms of selection of the stock. They should not look at what is cheap or what is costly... they must do their homework properly and only put in money in quality companies."

On how sure he is that this time around the foundation of the equity market is much more solid and we are not headed for another scam, Mr Oswal says, "I do not think that we have a scam in the making. For one thing the regulatory authority is very strong. Two, there is transparency in the system and shorter trading cycles have put safeguards in place. I do not think that today anybody can really manipulate the market."

Five stocks of his choice: SBI, Dr Reddy's Laboratories, Gas Authority of India, Hero Honda and UTI Bank.

Mr Arun Kejriwal

Mr Arun Kejriwal, a Mumbai-based investment analyst and consultant says the equity market "looks really good. It appears elections will only be held in September 2004, so till then the market will move up with a few corrections."

He feels that the intra-day top of 6,150 points for the Sensex will be breached before February 14. On this day in 2000, the Sensex had touched this all-time dizzy high.

He feels the engines that have been driving the equity market in the last couple of months are "the economy, growth in GDP, bulging forex reserve and a stable currency, improved corporate performance and a stable political scenario where a coalition will actually complete a full term in office."

On investment strategy, Mr Kejriwal advises investors to make only selective purchases, and that too in three tranches. His top five picks: ONGC, Ranbaxy, Tata Power, State Bank of India and Reliance Industries.

Mr Rakesh Junjhunwala

Mr Rakesh Junjhunwala is a Mumbai-based investor and stockbroker, whose transactions in the equity market — what he is buying and what he is selling — are watched keenly. Equity market players and stockbrokers are on the lookout for this information.

In an interview to Business Line two years ago, he had said, "The epitaph on my grave will be that I missed out on buying Infosys' IPO"!

He too is extremely bullish on the equity market. "Going forward, the market is looking very strong to me. I find the valuations reasonable and my advice to investors is to have a certain allotment to equity in their investment portfolio, particularly when you consider that the interest rates are low."

Though "nobody can ever be 100 per cent sure," he feels the chance of yet another scam brewing is very, very remote. One major reason for this is that this time the FIIs are investing in the Indian equity market in a big way and Indian stocks are being bought by the foreigners purely on valuations.

On why the FIIs should opt for India, Mr Jhunjhunwala says, "This is because India is a stable country with a strong currency and has reasonably large companies which have shown good results."

He declines to give his five top picks for the market saying, "As a matter of policy I never talk about individual stocks.

But my advice to equity investors is to stay invested. I will tell them that do not sell your stocks and do not feel insecure about your gains because there is more money to be made in the market in the coming days."

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