Fund managers see party rocking for long

Core spend and March numbers to keep Sensex going.

The benchmark Sensex may have managed to scale the 11000 mark intra-day today, but market experts are not making too much of it.

Considering that Indian equities have been attracting the attention of domestic and global funds alike, fund managers expect the liquidity-driven uptrend to continue on the back of good March quarter numbers.

"With the economy and corporates doing well, I don't see any reason to worry, going forward," says UTI Mutual Fund MD and CEO, UK Sinha.

Growth prospects and infrastructure spending will drive corporate earnings, which in turn will boost markets, feel analysts.

Observers see macro economic indicators in place, though short-term liquidity mismatch could stoke market volatility.

Prudential ICICI Asset Management MD, Pankaj Razdan says, "Although the markets are fairly valued at these levels, the outlook is positive in the medium-to-long-term. There is nothing to worry over the horizon. As a fund, our task is to pick good companies and these exist, no matter whether the market is at 3000 or 11,000."

Paras Adenwala, chief investment officer-equity, ING Vysya Mutual Fund said, "Money is flowing into equity. We expect this trend to sustain, which will keep the markets strong. It is difficult to take a call in the short to medium-term, but the long-term horizon beyond one year, looks very bright. However, it has to be noted that the valuations are quite expensive at the moment."

Fund managers feel that almost all sectors have contributed to the rally thus far and are expected to do so in future. Adenwala adds, "We are positive on technology, capital goods and FMCG. However, we don't have that outlook for oil marketing companies, which face the administered pricing regime."

Sinha feels auto, auto ancillary, infrastructure and banking should do well in the months to come. Pharmaceuticals, which has been a laggard according to him, is also expected to pick up.

Razdan says although any sectoral analysis from the stock market point of view is different from the economic point of view, good growth is expected in cement, IT and auto sector. He is not bearish on any particular sector.

Adenwala thinks the biggest market driver in the near future would be the March quarter results. Beyond that, the government's performance on the reforms front and deficit situation would determine the direction of the markets to an extent. The deficit should be maintained at least at the current levels, if not reduced.

"Reforms will drive the markets further. For instance, labour reforms could change things for textile and the manufacturing sectors," Adenwala said.

The BSE Sensex rose to touch an all-time high of 11017.25 on Tuesday, before closing at 10905.2. Strong inflows from FIIs and mutual funds on Friday perked up the sentiment. FIIs bought shares worth Rs 474.9 crore on Friday, whereas, domestic funds bought shares of Rs 460.5 crore.