The Hindu Business Line : Market View

We expect a GDP growth of close to 8.5 per cent in FY07 on the back of higher growth in industry and services. This makes India among the fastest growing economies in the world. Corporate performance has beaten analyst expectations over the past few quarters; we hence saw significant earnings upgrades. Against an earlier expectation of 15-20 per cent growth in profits for FY07, we now expect an earnings growth of 20-25 per cent, on the back of better than expected first half results.

HSBC Mutual

RBI announced that the government would allow foreign investment of up to 49 cent in stock exchanges, depositories and clearing corporations. The investment will have a separate FDI cap of 26 per cent and FII cap of 23 per cent, and the latter can buy only through the secondary market. This paves the way for overseas entities such as NYSE to pick up an exposure to Indian exchanges. Stock exchanges are looking to increase their footprint across regions to share trading systems and provide their customers deeper liquidity.

Franklin Templeton Investments

From an earnings perspective, there have been 13 consecutive quarters of upwardly revised figures; the latest revisions saw FY07 earnings growth revised from 18.1 per cent to 30 per cent. With valuations at the higher-end of the trading range, there is potential risk for some near-term market volatility. However, it is also worth noting that current valuations appear to be fairly well supported by earnings growth and the positive macro environment.

Fidelity Perspectives

While 2006 turned out to be another excellent year for most markets, notably the riskiest, we expect equities to outperform other asset classes for the fifth year running. The fact that equity valuations (both in absolute and relative terms) are still undemanding, despite the 128 per cent rebound in the MSCI World Index (in USD) since the low hit on March 11, 2003, adds further weight to this scenario. Government bonds are likely to stage another disappointing performance and might even under-perform investment grade bonds once again.

Emerging countries will continue to underpin global growth and, in the case of export champions and commodity and oil producers, represent a source of abundant global liquidity. China and India, in particular, are intent on cooling down their economic machines via administrative and monetary policies. We are convinced that the governments of these two regions run no risk in attempting to bring growth rates back down in line with potential. Moreover, it is probable that, at the end of 2007, growth will exceed expectations and flirt with levels witnessed in 2006.

BNP Paribas Asset Management

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