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More correction on cards in stock markets

Last updated on: March 17, 2015 09:57 IST

'Global markets could correct 5-10 per cent. If that happens, Indian markets will correct about 10 per cent.'

Investors look at a large screen displaying India's benchmark share index on the facade of the Bombay Stock Exchange (BSE) building in Mumbai. Photograph: Punit Paranjpe/Reuters 

Samir Arora, Founder and fund manager, Helios Capital  

Generally, we are positive on the markets. They do not need fresh triggers every day to give reasonable returns, which is what we expect from here on.

Reasonable returns (10-15 per cent) during the rest of the year are very attractive by global standards and FII interest will continue to be strong.

Indian investors will also find they cannot find these returns in fixed deposits, real estate or gold. They have to change their asset allocation in favour of equities.

The markets haven't run ahead of fundamentals. We favour private sector banks, finance companies, auto and ancillaries, pharma/ consumer/IT/select infrastructure stocks.  

Andrew HollandAndrew Holland, chief executive officer, Ambit Investment Advisors  

In February, we felt the market valuation was expensive and earnings had to catch up. We expected the Nifty to remain between 8,500 and 9,000.

At a global level, there's a currency war underway and there'll be a loser somewhere; that, in my view, could be one of the emerging markets. More than domestic, global factors will bring markets down.

Global markets could correct 5-10 per cent.

If that happens, Indian markets will correct about 10 per cent. The banking sector (private banks) remains one of our favourites.

Financial leverage/financial gearing will also play out if interest rates head lower. I am less bullish on the IT sector; I think its decade of growth is over.  

Rashesh Shah, chairman and CEO, Edelweiss Group  

After a strong rally, Indian equities are showing some signs of tiredness at higher levels.

The market is becoming apprehensive about stretched valuations (16 times FY17), as corporate performances are muted (in the third quarter of FY15, Sensex companies reported 1.5 per cent top line de-growth, the lowest in the past nine quarters) and consumer demand is yet to recover.

But from a long-term perspective, Indian fundamentals are strong.

Though global trends might impact the short-term performance and the market might correct 5-10 per cent, investors should use this opportunity to buy fundamentally strong companies.  

Abhay  Abhay Laijawala, head of research, Deutsche Equities India  

While we remain constructive on the equity outlook and reiterate our Sensex target of 33,000 for the year, the market is likely to consolidate in the near term.

With most macro drivers having panned out, investor focus is shifting to the fourth quarter reporting season, which should start in a month.

Investors are likely to take interim cues from the US Fed on the potential timing of the 'lift-off' on interest rates.

The Sensex is currently trading at 16.5 times its one-year forward earnings, which puts it in line with its longer-term trading average.

With aggregate demand in the economy still weak, investors should focus on the quality of earnings, rather than earnings growth.  

Rakesh Arora, head of research, Macquarie  

The markets will consolidate at these levels in the near term, as there are hardly any triggers.

But if the government is able to pass important legislation such as the land Bill or the mines Bill, it will give a leg-up to markets.

If monsoon projections are good, it will lead to expectations of higher demand and there could be a rally around September-October.

Otherwise, the market is likely to consolidate for some time.

There are some negative triggers, such as earnings, which are likely to remain weak, and a rate rise by the US Federal Reserve, expected around June. Nevertheless, markets could remain range-bound and not tank from these levels, as the issues are already known.  

Gautam ChhaochhariaGautam Chhaochharia, head of research (India) at UBS  

Three drivers have kept Indian markets buoyant -- an easing rate cycle, falling oil prices and hope of reforms.

The markets have been disappointed by the growth through the past two quarters but ignored it, hoping it would recover in the coming two quarters.

There is a cyclical recovery underway but we expect growth to accelerate only in FY17.

The recent market correction might have been driven partly by concern on a rate rise in the US but it suggests concern on growth, apart from heavy positioning.

Consolidation and profit-taking are likely in the near term, though we remain directionally positive on Indian markets, with a Nifty target of 9,600 for 2015-end.

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