The benchmark index may get a 24-carat shine

Written by Ninad Dhirubhai Sheth | Updated: Dec 31 2007, 07:52am hrs
It looks like 2008 could be the year the Sensex weighs in at 24k. Analysts are bullish, fundamentals have never looked better, foreign money is pouring in and the retail investor is keen. These and much more can combine to power the benchmark index of the Bombay Stock Exchange to dizzying heights.

This is not to say the volatility is behind us. Indeed, if the last quarter of 2007 is any indication, this is the market for those who can stay put when the chips are down. What has changed is that, the market has matured or, put differently, has learned to rock! It now takes the dips in its stride given that the larger picture is looking good. Says the head of a large US based hedge fund, who did not wish to be identified, There could be political uncertainty, and even the Budget could be full of populist sops. That is, however, not in the realm of the unexpected. It would be pretty much on predictable lines and one would imagine that it would be factored in by the market as well. Bad news is factored in and good news coming by the way of the Budget could act as rocket fuel.

Corporate India seems to have a positive feeling for 2008. Says Krishnamurthy Vijayan, CEO of J P Morgan Asset Management, The markets look good for the coming year. The positive trends that have characterised corporate profits will most likely continue in 2008. We are very bullish in terms of better corporate results coming in the next quarter. What is more, in certain sectors, it could be a major improvement over the last year.

Experts feel this could be the comeback year for IT stocks. After all, even with the fall in the dollar, the workflow to India hasnt really stopped. With smart treasury management and some cost-cutting, IT firms could yet surprise the markets.

Vikas Seth, director, My Money Securities, says, We have largely been bullish on the Indian stock markets since 2003. We feel India is one of the fastest growing economies in the world. The economic indicators show that India can grow by 8.1-8.5 % for a foreseeable future. This growth will keep the trend in place. The markets should leap near or above 24 K. This could be earlier than one thinks.

The biggest bang is most likely to come from the foreign institutional investors continuing interest in the market. Projections on how much money will come in differ, but it is estimated that a staggering $20 billion may flow into the capital market. The trend of easy liquidity on offer is likely to continue for some more time. This in turn will assist in the index climbing at a steady clip, accompanied by robust profits from the corporate world. Infrastructure addition such as private airports and the projected completion of the Reliance refinerys second phase at Jamnagar will go a long way to boosting sentiments on the bourses.

Cholamandalam finance chief financial officer RRajgopalan says Look at the fundamentals they are sound. Corporate earning growth should average above 20%t. Add to that the overall liquidity climate, which is looking positive, and this is not just from the side of the foreign institutional investors. Domestic pension and trusts funds are now entering the securities and capital markets thus widening the investor base.

This will combine to power the markets. It is certainly possible that the market, when it reflects these numbers in terms of capitalisation, could lead to the magical figure of 24K points. So investors should get set for a ride of their lifetime. All things remaining constant, a 24-carat market looks within reach in the New Year. And it is largely undetermined by politics. That could possibly be the biggest change.