at 5.5% in FY15e and 6.5% in FY16e, we are of the view that most macro parameters will show improvement over the next 12-24 months, which will eventually lead to policy rate cuts, which again will re-rate equities. The biggest advantage to corporate India will be faster decisions based actions by the new Government, leading to an economic recovery which in turn has already enthused investors. We are in effect moving into a new realm where the long term average of the markets will get redefined. This is because markets are a function not just of earnings but a combination of sustainable earnings along with positive sentiment and confidence. Though earnings may take time to reach the pre-2008 levels, the medium term traction will continue with the strong push by the government to reform and remove some of the impediments the economy has faced recently.
BSE Sensex closes near flat, NSE Nifty falls on Narendra Modi swearing-in day as PM
(Reuters) BSE Sensex ended flat on Monday in a volatile session, giving up earlier gains of nearly 2 percent due to profit-taking in blue-chips such as IDFC while caution ahead of Narendra Modi's ministerial appointments also weighed.
Selling pressure was broad-based as mid-cap shares saw steep falls. The NSE Midcap index ended down 2 percent, after earlier surging as much as 2.1 percent to hit a record high at 10,673.75.
Hopes of an economic revival by the incoming Narendra Modi-led government have helped maintain the BSE Sensex as the best performing equity index in Asia for 2014 with 23.4 percent returns compared to Pakistan's 22.1 percent and Indonesia's 21.7 percent.
Investors are awaiting the composition of Narendra Modi's cabinet, allocation of portfolios to the prime minister's office, and his choice for finance minister, widely expected to be front-runner Arun Jaitley.
"In the short term there would be some consolidation. Expansion of price-to-earnings has happened, now corporate profit growth is on watch," said Aneesh Srivastava, chief investment officer at IDBI Federal Life Insurance.
"The outlook is improving with Modi being there. I hope all important ministerial positions remain with the Bharatiya Janata Party," Srivastava added.
The benchmark BSE index ended up 0.1 percent, or 23.53 points, at 24,716.88, after earlier