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State of the markets in 2012

While 2011 was the year of uncertainties,2012 is not expected to be too different. No charts or technical analysis could explain the irrational behaviour that the Indian equity markets showed. While the experts seem to be divided on what to expect this year,there is a certain optimism over the second half of 2012

Written by Agencies | Published: January 1, 2012 2:34:23 am

Dinesh Thakkar,

CMD,Angel Broking

Top three concerns

* Euro crisis leading to volatility and outflow of risk capital.

* Policy logjam is slowing growth and leading to inflationary tendency.

* Crude remains high and current account deficit is widening. Fiscal deficit too will exceed Budget Estimates.

Corporate sector outlook for 2012-13

Top line growth remains high,in the 20 per cent range due to inflation,but earnings growth for 1HFY12 is already down to about 10 per cent,and 2HFY12 is likely to be similar. Earnings may be lower than 16-17 per cent.

Market outlook for 2012

Near-term: Domestic and global outlook remain an overhang.

3-6 months: At around 15,000 markets will continue to find valuation support and may hit 17,500.

Sameer Kamdar,

CEO & MD,ASK Investment Managers

Top three concerns

* Slowing domestic economy and stress on government finances

* Stress on the banking system due to rising NPAs

* Recession in euro zone with high degree of stress on state finances and banking system

Corporate sector outlook for 2012-13

Sensex would have an EPS of around 1,300 — a growth of 17 per cent over FY12. Overall,the index profit growth is likely to come from export oriented industries such as pharmaceuticals and IT. FMCG could deliver steady earnings growth.

Market outlook for 2012

Some more downside expected. Q3 numbers are expected to disappoint. Union Budget may not inspire confidence.

C J George,

MD,Geojit BNP Paribas Financial Services

Top three concerns

* All round negative sentiment aided by media exaggeration of “governance deficit” and corruption

* “High inflation – high interest” economic environment and fiscal pressures

* Global financial market uncertainty arising from European Union difficulties and its global impact. Risk capital is just not available.

Corporate sector outlook for 2012-13

There is an all-around increase in cost for the corporate sector. Rupee depreciation will add to Q3 worries. There will be pressures on consumption growth.

Market outlook for 2012

Despite volatility over next 6 months,there will be ample opportunities to invest in good firms.

Ramanathan K,

CIO,ING Investment Management

Top three concerns

* Policy inaction is the biggest concern as of now for the markets especially in the infrastructure space. It is also leading to a de-rating of the markets.

* Investments are held back by corporate due to policy paralysis.

* There are concerns over the euro zone as there is no clarity on the situation

Corporate sector outlook for 2012-13

Revenue is expected to grow at 15 per cent in FY2012-13 while corporate earnings growth would remain at 12 per cent. Government may take measures to ireduce fiscal deficit in the second half.

Market outlook for 2012

The valuations will go down further by up to 10 per cent over the next six months. Markets are expected to trade at a PE of around 13.5.

Gagan Randev,

CEO,Religare Securities

Top three concerns

* Lack of policy intervention by government,expectations of populist measures due to state elections and populist budget

* There is a worry that rupee may fall a little more before it strengthens.

* With GDP growth coming off,the corporate performance would be worse than 2011. Liquidity is also becoming a concern now.

Corporate sector outlook for 2012-13

The earnings growth would be around 8 per cent for the next fiscal which is 4-5 per cent lower than this year’s growth of 12-13 per cent.

Market outlook for 2012

Market will make its bottom in the Q1 of next calendar. It may fall by 10 per cent between now and budget and the Nifty can be at 4,200 level.

Sudip Bandyopadhyay,

MD & CEO,Destimoney

Top three concerns

* The European debt concerns . There is no satisfactory solution yet on the horizon.

* Policy paralysis as there is nothing happening on the reform front. With UP elections round the corner,more populist steps are expected.

* Macroeconomic situation particularly the fiscal deficit and inflation. Rupee and oil prices also remain a concern.

Corporate sector outlook for 2012-13

Corporate earnings can reach up to 15 per cent in 2012-13. Slippages can come on account of global turmoil.

Market outlook for 2012

Next six months are going to be very choppy because of global concerns and domestic political situation.

Dipen Shah,

Head-Fundamental Research,Kotak Securities

Top three concerns

* Euro crisis and US debt issues

* Chinese slowdown

* Lack of policy reforms

Corporate sector outlook for 2012-13

In this scenario,it is difficult to gauge the growth rates for FY13. Consumption demand has held up till now but we need to see the sustainability of the same. Policy initiatives and reforms are a pre-requisite for decent growth in FY13. However,the profitability margins would come down.It depends a lot on the policy decisions.

Market outlook for 2012

Market volatility to continue for next 3-6 months. Markets can give returns of about 20 per cent over one year,based on the assumption that interest rates have peaked out.

Jaganatthan Thunuguntala

Head Equity,SMC Capital

Top three concerns

* High inflation and slowing corporate earnings growth

* Policy paralysis

* Euro zone crisis and risk of real estate bubble burst in China

Corporate sector outlook for 2012-13

About 9 per cent corporate growth in FY13 is likely. However,the profitability margins would come down. Depends a lot on the policy decisions.

Market outlook for 2012

Probable BSE Sensex levels are 12,500 (3 months); 11,500 (6 months); 16,500 (12 months).

The recovery would come only in the second half due to two reasons. First,there are fair chances of inflation coming down in 6 months and second,there is likelihood of GDP growth forecast improving from current levels.

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