Indian stock market outlook

[Indian stock market outlook/Any chances of falling again/Will it hit new high/Indian stocks valuations attractive/effect of US reccesion,inflation and high crude prices/Fii activity/Support and resistance level of indian stock markets/Liquidity flow/Economic growth/Creating indian mnc/Sectors to outperform/16000-18000 range]


Everytime market trades higer, members have got a query-"Is the same trend going to continue?Will the market make another high?If you people get hold of both the aspects, the cause of the bull run and its duration backed by high confidence and conviction,it would be easier isnt it?While in the long term, the market is driven by factors like economic growth, earnings, valuations etc, in the short term, only two factors work — sentiment and moneyflow or liquidity.

Our country is among the top 10 countries in the world to have a trillion-dollar GDP and m-cap simultaneously.It is the 14th largest country globally in terms of m-cap and 12th largest economy in terms of GDP. It is also the fourth largest market in Asia (after Tokyo, Hong Kong and Shanghai), and India's GDP growth rate is the second-fastest globally. The country's per capita income has risen over 7-8% in the past 2-3 years.

We have heard of global multinational companies and the growth stories of them.Now our entrepreneurs are ready to play the global theme with the mindset of creating Indian MNCs. These easily signifies that India has reached global scale and size. The economy is on its way to becoming an economic super power. There will be some speed bumps along the way, but there won't be any U-turns.As is the case globally, when economies undergo this transformation, the equity asset class creates wealth in the economy and outperforms most asset classes. India will witness the same phenomenon; equities will outperform most asset classes over 3-5 years. From a macro perspective, our country can look a bit expensive, but taking into account the growth profile and possibility of value unlocking from balance sheets, it is bound to remain expensive.The idea is to take exposure in the right sectors and stocks.Mind you guys arun would be always there to guide for the same.

India is the classical bottom-up market, where investors can find hundreds of stocks which can generate huge returns over the longer term. Indian equity investment opportunities can be classified into five macro themes:-

(i)Outsourcing-based opportunities-IT, pharma, auto components
(ii)Domestic consumption/lifestyle-based opportunities-FMCG, retail, entertainment
(iii)Infrastructure spending-based opportunities-power,ports,roads, airports,mining,construction
(iv)Agriculture-based opportunities-irrigation,agri processing
(v)Banking and financial services. Allocation in each of these themes can vary, depending on investor profile and time frame.

Greed- and fear-driven sentiments cause market movements in the short term. What happened in feb/ March '08 reflected fear among market participants.As people realised the overselling of equities the fear started receding, backed by strong corporate earnings and domestic and international inflows.Though the market performed well till now post that period, there is a lot of scepticism.We are slowly coming out of the fear stage and moving towards the buying stage.How long it will last is a function of liquidity in the short term, global markets and news flows. There is still room for some upside from here, before another correction sets in.Macro level concerns like the crude prices,inflation will remain and may create an overhang.At the same time, there's enough appetite for corrections to buy Indian paper.The Sensex may remain in the 16000-18000 range in the next quarter.