Personal Investment Strategy, Tactics and Tips

India stock watchers are expecting the markets to be tougher this year too (now just who isn’t…). Lower interest rates could help the real estate sector.

India, Experts speak, The Economic Times, 1 January
Ratnesh Kumar MD & Head-India, Citi Investment Research
I expect 2008 to be a tougher, yet a positive year for Indian equities. Growth drivers are strong and resilient - expect GDP growth of around 9% and earnings growth of around 20%. Valuations overall are not really a big concern once embedded asset values are considered, but further PE multiple expansion looks unlikely. What the market has to guard most against is overconfidence, be it among investors or companies (in fund raising, acquisitions and governance).

Keshav Sanghi, Head, Deutsche Equites
I am bullish on India. I see 15-20% growth for Indian corporates and a 15-20% growth for index for the year from these levels. There are various factors underlying this bullish tone. Besides continued corporate earnings, an m-cap of $1.6 trillion is attracting a whole new set of investors. Domestic investors are also waking up to the India story. The year 2007 saw inflows of $16.5 billion. I see no reason why it cannot be a lot higher, this year.

Andrew Holland, ceo & md, DSP Merrill Lynch
Globally it is going to be a testing year. This quarter will set the tone and we will start to get real evidence of how hard the landing in the US is going to be. There are concerns over the increase in credit card deliquencies which is starting to creep higher.

That is going to spook the market. Without doubt we will see a decrease in interest rates, which will put pressure on other Asian countries to follow suit. India, on its part is definitely on a much better footing given that it is one of the best domestic driven economies.

Nilesh Jasani, Head- Research, Credit Suisse
The Indian market looks overstretched. It has the lowest dividend yield, it has a price to book multiple that is very high, just a shade below Morocco, and it’s not going to be a season of standout earnings from here, unlike the period between 2004 and 2006. Decoupling is totally valid in India’s case.

If you have a US GDP growth that is mildly weak - 0.5-1.7% as per our forecasts - then India could be the beneficiary. Investment-driven growth themes such as capital goods, construction and metals are going to play out. There is value in technology, though not for near term gains. There is significant asset quality improvement in public sector banks, and they should not be trading at such a discount to their private sector counterparts.

Real estate prices haven’t risen too much this year, mortgage rates are not an issue, and therefore we feel real estate could become a theme. There is a market leader because of his huge topline growth. So it would be dangerous to think that everyone in the same space, though growing at a slower rate, can command the same valuations as the leader.