India's stock market will take time to recover from the current state and next two to three years would be difficult to predict, a top official at DSP Merrill Lynch said.With federal elections looming large and major decisions yet to take place, things are looking uncertain and investors as such don't like uncertainties, Hemendra Kothari, founder and chairman of the firm said."Stabilisation will take time and (it's) difficult to say. at what levels. This kind of crisis is not seen by many living people. And globally everybody is affected," said Kothari, one of the first finance firm's chief to tie up with a global bank. Globally, most of the hedge funds have either disappeared or shrunk, he said, adding that there is an element of uncertainty in the next two or three years. Hedge funds are slowing down investment parts.India's benchmark index has fallen 54 per cent so far in 2008 and is on course for one of its worst years ever as foreign funds withdrew more than $13 billion in 2008, deterred by a global financial crisis.The 30-share benchmark index is seen at 10,750 points by mid-2009 and at 11,000 by the end of next year, according to a median forecast of 13 analysts.Kothari who has helped his clients wade through the stock market crashes in 1992 and 2001 said telecommunications, healthcare and consumer goods looked safer, while textiles, technology outsourcers and financials could be hurt."In India, it is not a bad year, definitely profits were less, but we made profits and our businesses are all in a strong positions" he said adding firms that are less leveraged will have fewer problems to contend with.But, local firms are still battling a cash crunch, after the overseas debt markets vanished and domestic expansion plans are kept on hold amid slowing demand, Kothari added."Capacity building is not taking place. We need infrastructure creation that can generate demand. That's the whole priority that the government has to focus on immediately," Kothari said.India say it needs $500 billion to rebuild its overburdened infrastructure such as ports, roads, bridges and power plants.But with India's fiscal deficit running close to 8 per cent of the total GDP, it leaves the government will little room to manouver, he added.
