the last 12 months even as the trailing twelve-month earnings of the companies constituting the BSE Sensex grew at a subdued 8 per cent.
Apart from the rate cut and reform theme, which is widely expected to seen gainers in consumer sectors such as FMCG, banking and retail, many analysts are getting more specific on individual stocks. Brokerages such as Bank of America Merrill Lynch have said they are overweight on rate sensitive sectors like autos (Maruti and Tata Motors), telecom, financial sector (ICICI Bank, HDFC Bank), pharma (Lupin and Glenmark) and real estate (DLF).
On the other hand, the sectors that took a beating during the current year, including businesses with big global operations and those sensitive to a depreciating rupee such as IT, power, metals, and oil and gas underperformed the benchmark indices, could be under pressure the next year as well.
Foreign investors, who have been key drivers of the Indian stock story in 2012, even as domestic heavyweights such as a LIC choose to take a contrarian view and book profits, are likely to stay invested in India in the coming months and the level of optimism among is projected to spill over into 2013. According to data from Standard Chartered, Asia is likely to see foreign inflows of $42 billion in 2013. While gains are broadly expected across emerging economies in the region, the bank is betting on India, along with Philippines and Thailand, to be 2013’s star performers, each offering returns of 15 per cent next year. In the next year, the bank forecasts that stocks will get a boost from interest rate cuts by the Reserve Bank of India, which will reduce the cost of capital and support investment growth, and from easing inflationary pressures — a positive for profit margins.
According to Sebi data, the net investment by FIIs during 2012 (updated till December 14) was $22.22 billion (Rs 1,16,550 crore), making this the second highest net inflow in a single calendar year since foreign investors were allowed into the Indian capital markets in 1992. In 2012, FIIs had