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Citigroup Global Markets sees the Sensex at 21,500 in December this year, lower than its earlier estimate of 22,000. The firm also forecasts the country's growth at 8 per cent for the current fiscal year and sees corporate earnings in the 18-19 per cent range.
"The structural risk lies in profitability, not growth," said Mr. Aditya Narain of Citigroup at a conference in Mumbai. The return-on-equity which is very high now, will be threatened in the medium term, he added.
The firm is overweight on financials, energy, pharma and telecom. The catalysts to growth will be easing macro and commodity price pressures, capex revival due to governent policy and widening global growth differential.
The economy is close to the peak in terms of incremental pressures from falling growth and rising interest rates.
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