|
Business
What is in store for markets in 2008
|
Action will be in infrastructure, energy and financial services
|
The early part of 2008 is likely to be reasonably robust on the back of fresh foreign inflow and good corporate results.
The stock markets witnessed a phenomenal growth in the year 2007. However, with a difference, it moved along with major reforms introduced by the market regulator, Securities and Exchange Board of India (SEBI). The markets learned to adjust with the regulator, leaving no room for any fly-by-night operators. Further, the market also expects a buoyant year in 2008, even while maintaining an orderly growth.
Slew of measures
The major announcements which will have a positive and strong impact on the markets in the coming year are: Real Estate Investment Trusts (REITs) to be allowed to invest in stock markets by early next year; amendment to the Indian Trust Act, 1982, will be moved in the next session of Parliament; PFRDA, the pension regulator, cleared the way for investing up to 15 per cent of the retirement money of Central and State government employees in stock markets; short-selling by institutions allowed along with the launch of a Securities Lending & Borrowing scheme (expected to commence early next year); seven new derivative products to be launched by NSE and BSE next month; curb on the issuance of Participatory Notes (P-Notes); and mutual funds can invest abroad up to $5 billion against $4 billion now. Further, the Reserve Bank of India’s decision to permit resident individuals to remit up to $200,000 under the LRS from the earlier $100,000 also will have a positive impact.
“The stock markets witnessed an unprecedented bull run in 2007. The markets saw the emergence of the real estate and financial services sectors. We believe that 2008 is going to be a phenomenal year for the retail sector, especially rural retail. And there would be a lot of action on the microfinance sector. For the investors looking to play the long-term India growth story, we would advise them to look closely at stocks in the infrastructure and engineering, energy, banking and financial services, food (dominated by select MNCs today), healthcare and the logistics sectors over the next two years,” said Girish Dev, CEO, Networth Stock Broking Ltd.
According to Mr. Dev, the markets may witness higher volatility and may not fetch the returns seen in 2007, but “we remain positive on the equity markets. Ourselves being in the financial services space, we believe that the next 5-7 years will see this sector grow rapidly and establish itself akin to the telecom sector as seen in mobile telephony”.
Foreign fund flow
The headroom in terms of the serviceable population in India for financial services is enormously large. Rising crude prices and rupee appreciation may be the dampeners, but overall, the flow of money into India from global players does not look to slow down. The confidence stems from the fact that India’s growth is domestic-led. This would remain so for the next year and a half,” Mr. Dev added.
“The early part of 2008 is likely to be reasonably robust on the back of fresh foreign inflow and good corporate results. The second half may be more challenging because of over-riding concerns on U.S. slowdown as well as elections in both India and the U.S. The measures taken by the regulators are in the right direction and will broaden and deepen the market. However, they need to ensure that regulatory delays do not slowdown fund flows. The frontline indices will not increase beyond 15 per cent in 2008,” said Anand Tandon, Director Gryffon Investments Advisors Pvt. Ltd. From April 2007 till the end of the year, the indices have shown a growth rate of 55 per cent.
The benchmark BSE 30-share Sensex closed at 20206.95 on December 28, 2007, against 13786.91 on December 29, 2006. The year’s low was 12316.10 on March 16 and the high was 20498.11 on December 13. The year-on-year growth was 46.6 per cent. The 50-share NSE Nifty recorded a growth rate of 53.3 per cent as it rose to 6079.70 on December 28, 2007, from 3966.40 on December 29, 2006. It also recorded a high of 6185.40 on December 13, 2007, and a low of 3554.50 on March 5. The net FII inflow in 2007 was Rs. 69,401.50 crore against Rs. 36,539.70 crore.
OOMMEN A. NINAN
Printer friendly
page
Send this article to Friends by
E-Mail
Business
|
