, head of research (strategy), Angel Broking, when we asked him about the markets in 2004. "We were not worried even when Black Monday happened. I expected a rally to take place, but the pace at which it moved surprised me," says Chokhani honestly.
"All classes of investors have made money in 2004, whether it be institutional or retail." So what made it such a big year for the markets? "For me, the highlight of the year was definitely the boost given by the FIIs," says Chokhani.
But haven't the FIIs walked this path before? "The difference is that a lot of hedge funds entered the markets this year. This resulted in a lot of liquidity in the markets." So what exactly are they seeing in India this time?
According to Chokhani, it is all about arbitrage opportunities. "FIIs are looking for arbitrage opportunities. They are not just coming to India for the sake of it. In fact, markets like Taiwan, Thailand and South Korea are doing better than India," he explains.
So what does the future hold for retail investors? Chokhani expects an 18 per cent growth in BSE 30 stocks by the end of FY06.
While he envisages boom times for the market overall, there's one advise he makes loud and clear: "Retail investors should get out of penny stocks right NOW." Chokhani explains it thus.
"Most penny stocks (market-cap of less than Rs 50 crore) are ruling at 20-25 P/Es, which is much higher than the Sensex P/E, which rules at 11x based on 2006 estimates." There are more concerns. For instance, liquidity. "Mostly promoters hold the lion's share of these stocks, which hampers liquidity."
While Chokhani's outlook is bullish on equities, he has preference for some sectors. "Pharma, textiles and banks are the sectors we are positive about. IT sector also looks good though upsides may be limited there."
What about the index? "I expect at least a 300-400-point rise from the current levels in FY06," says Chokhani. In other words, expect the markets to sparkle even more.
