The Hindu Business Line : Market View

From a global perspective, the increased consensus for a soft landing of the US economy augurs well for overseas demand for export-oriented sectors. The housing deflation in US could help trigger higher savings. On the other hand, Asia is expected to provide the global economy a further thrust given the high domestic demand component for many countries. While valuations of Indian markets would appear to be higher on a relative basis to other countries, we feel that the high GDP growth rates and the structural drivers that are in place justify the growth expectations. This is one of the reasons that we continue to see FII flows into the market and long-term investors such as pension funds in various countries are expected to increase exposure to India.

Franklin Templeton Investments

Given the current scenario, the obvious question is: Can this rally continue and become broad-based? There are no easy answers to this. Even on conservative estimates, corporate earnings momentum seems strong. Although the Sensex does not appear cheap at current levels and the valuations are expensive relative to those around the world, one may be assured that these valuations are justified on high economic growth. The current rally was not broad-based, which goes on to show that the era of making easy money is over. Investors may encounter short-term volatility as the market tries to scale further highs or even sustain at current levels, and hence, investors should remain patient and have a long-term investment horizon.

PruICICI Mutual

Strong results posted by corporates for the 2nd quarter acted as a driver for the market. These earnings figures place the equity valuations at attractive level since investors have already started discounting FY08 earnings as we approach the year-end. The other notable feature of this rally has been the revived influx of liquidity in the equity markets post-May 13. To give a perspective, FII inflows in the stock markets during June and July had decreased to $105 million and $252 million respectively. However, in the changed scenario, the FII inflows again resumed during late August and increased gradually in the subsequent weeks reaching $1.4 billion mark in October. The liquidity situation is further strengthened if we also incorporate the mutual fund cash component. This aggregate liquidity could play a catalytic role in sustaining the current momentum.

Kotak Mutual

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