The Hindu Business Line : Market View

Reports suggest that Indian companies' capital expenditure during FY06 has risen significantly, indicating capacity expansions coming on stream. This indicates that FY07 will be another year of high growth in capex, ultimately driving expectations of strong financial performance of companies. A couple of IPOs have hit the market, which signals optimism about the growth proposition offered by India.

Valuations are settling down in a fair-value zone and, to an investor who is willing to discount FY08 earning, the market looks attractive. The investors may take comfort from the fact that the FIIs returned to buying, helping stocks rally in last two months. The market will look for some consolidation at current levels.

PruICICI Mutual Fund

We believe that the long-term growth story is intact, supported as it is by the thrust on infrastructure, demographics, rising income levels and favourable India-specific geopolitical developments. Our near-term cautious view on equity is more a reflection that a bullish long-term outlook for the economy need not translate into a relentless upward movement in stock prices, especially when global headwinds (interest rates, commodity prices and geo-political developments) are stronger than ever before.

Sundaram BNP Paribas Mutual

The IIP (Index of Industrial Production) numbers for the first quarter indicate that the capex cycle continues to remain robust. Crude prices and interest rate rise have still not hit the performance of companies. This may be visible only by the end of the third quarter.

Kotak Mutual Fund

The current market discounts the FY07 consensus EPS 15 times. Our sense is that even with revisions in earnings estimate and fluctuations in investor risk appetite, the Sensex movement will be range-bound. Low participation and low liquidity in small- and mid-cap stocks may result in violent swings.

Birla Sun Life Mutual Fund

The pause to interest rate increases in major economies such as the US and Japan may have positive implications for portfolio flows. Recent trends suggest that liquidity is beginning to trickle back into the emerging markets, with India attracting a relatively high share of the allocations. The strong signals from quarterly results announcements could also be helping this trend. With macroeconomic numbers continuing to suggest optimistic trends and worries about a below-trend monsoon receding, the overall tone appears to be turning positive for the market.

Franklin Templeton Investments

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