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The afterglow of a tumultuous but successful year just gone by is understandable.
One can take the liberty of saying that a non-euphoric, feel-good factor of a New Year will last on Dalal Street, at least briefly. It should linger for a while and take care of dips of a day or two.
The benchmark Indian equity index is close to its historical peak. At the same time valuations are not far off from the challenging levels vis-à-vis the forward earnings. India Inc's earning growth track record amid heightened pressures had been stable. That's unique among the emerging or “arrived” markets.
There are various opinions on the macro market roadmap for the year. The broad consensus suggests that based on a 15 to 20 per cent earning growth, Sensex would scale new height.
Several, if not all, roads had led global investors to India last year fundamentally for this reason.
Many keen market observers said that 2011 promises a new benchmark peak between 23,000 and 24,000.
According to Mr Gul Tekchandani, a market strategist, the benchmark index will create a peak at 24,000, but could swing substantially.
Mr Saurabh Mukherjea of Ambit Capital foresees the Sensex fluctuating between 23,000 and 15,000 in CY11 with the early months being the most likely period when the index could move back towards 23,000. Higher volatility of the Sensex is also predicted by others. Some say the lower reaches may be at 15,000 or 16,000.
The year may be a turbulent one for Indian equities as the market wrestles with punchy valuation levels, QE2 induced inflation and flagging market momentum, Mr Mukherjea says.
If the risk appetite of the local investors does not increase, it will take a lot more money from the overseas investors to drive up the benchmark, points out a fund manager of an active foreign player.
Global and local liquidity flow dynamics are to keep the market on the tenterhooks. The higher inflation-led pressure and upwardly mobile interest rates may not allow the corporate sector to rest on their laurels of 2010.
(jayanta_mallick@
thehindu.co.in)
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