Foreign brokerages bearish on equity mkt

The Indian equity market is one of worst performing among its global peers this year says analysts.

Painting a gloomy picture of the Indian equity market,foreign brokerage houses have cut year- end target for Bombay Stock Exchange benchmark Sensex by as much as 15 per cent,amid a weak global economic scenario.

Global brokerages such as CLSA and Morgan Stanley have cut their year-end target for Sensex,while investment banking major Credit Suisse has expressed concern that India8217;s global linkages are now higher than what it was in 2008.

CLSA has cut its year-end Sensex target to 18,200 from the earlier 19,500. Morgan Stanley,on other hand,has reduced it target for 2011 by as much as 15 per cent to 18,850 from 22,750.

So far this year,Sensex has lost massive 23 per cent. It is down 25 per cent from November high of 21,108.64. The Indian equity market is also one of the worst performing among its global peers this year.

Going by the their research reports,tough days are ahead for the Indian equity market as they believe that at a time when developed economies are barely growing despite stimulus,India cannot remain insulated from the whole picture.

8220;India8217;s global linkages are now higher than in 2008. We believe slowing global growth will expand the trade deficit and hurt GDP growth,8221; Credit Suisse said.

It further added that import volumes for India would stay resilient,export volumes will not 8212; which in turn will expand the trade deficit and hurt GDP growth of the country.

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Sensex has lost 8.41 per cent since Standard amp; Poor8217;s downgraded the US government8217;s 8216;AAA8217; sovereign credit rating on August 5 8212; a move which raised question about the financial health of the United States economy.

Morgan Stanley believes the US and the euro area hovering dangerously close to a recession.

We reiterate that we are at the beginning of a period of uncertainty globally,and it is far from the end,8221; Credit Suisse has warned.

8220;Moreover,around 50 per cent of globally-linked Nifty EPS that was largely uncut so far,may see downward revisions,8221; Credit Suisse said.

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The BSE Sensex tumbled below the 16,000 mark for the first time in 18 months on Friday and registered its fifth straight weekly loss.

In this regard,CLSA said that 8220;while the sharp correction in the market may suggest attractive valuations,we note that the pace of corporate earnings downgrades has

intensified in the recent results season8221;.

8220;We will continue to stay cautious on the markets till we see some evidence of investment demand picking-up,8221; CLSA said.

According to Morgan Stanley,the key positives for Indian equities include surging corporate activity and good progress in sowing season,which bodes well for respective rural incomes and taming food inflation.

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However,factors that could adversely impact the markets include oil prices,inflation,high rates,slowing growth and alleged corruption scandals,Morgan Stanley has said.