Sense and Sensexability

Mumbai, Dec 30 | Updated: Dec 31 2006, 05:30am hrs
The search has begun for a fair Sensex value in the New Year and one clear theme is that of consolidation. After a 40% surge in 2006, experts now expect sensibilities to prevail amid overall enthusiasm. While intense surges are not expected, the growth story is expected to persist.

Most believe that the Sensex will move in the 13,000 range and will surge as institutional investors start looking at 2009 earnings towards 2007 end. Keeping this in mind, Kotak Securities has worked out a 11,400 to 13,700 band that reflects 2008 earnings. And a 12,600 to 15,100 band, based on 2009 earnings.

But most experts are unanimous on the northward direction of the market based on the buoyant economy. 2007 is expected to see the RBI to tighten the money in the system and this is likely to have an impact on the markets.

Says Samir Koticha, executive director, ASK Raymond James: Investors will do well to understand that the short-term cyclicality in the markets is part and parcel of the long-term goal of wealth creation."

Analysts believe margins are getting tightened and as the base increases, growth rate levels would stabilise. The Citigroup is more optimistic. Analysts have placed their Sensex December 2007 estimate at 14,700 to 16,000 levels. UBS Securities also pegs its Sensex target at 14,000 to 15,000 levels. JP Morgan Asia Markets Research has a sombre view and puts the Sensex at 13,600 levels.