| "Sensex valuations are low as compared to the peak levels in 2000, when it was trading at 22-25x," says Shukla. |
| "Apart from the valuation angle, one has to keep in mind that interest rates are also low. GDP growth should touch 8 per cent while the corporate sector will record 15 - 18 per cent earnings growth in the next couple of years." |
| Shukla sees intrinsic merit in the current boom, which he thinks is going to continue for a while. "The current rally is not one which is being driven by speculators. FIIs and hedge funds have been the big movers this year. Retail participation has also been good. So we have seen a diversified investment pattern this year." |
| In a year dotted with highs and one spectacular low, what has been the highlight for him? "The highlight for me has been the new government (Congress-led UPA) talking about divestment. The public offer of NTPC is proof of that. They have also hiked the prices of petrol and diesel despite strong opposition from many quarters. This shows that the government means business." |
| But on the downside, Shukla points out that the government's willingness to bailout sick firms (ITI being a prime example) continues to strike a jarring note. As the markets boomed this year, many of Shukla's bets came off. |
| "We got IT, power, textiles, capital goods, cement and petrochemicals right. But the pharma and FMCG sectors disappointed us." |
| What about the future? Shukla is optimistic that the markets will give 15-20 per cent returns in 2005. But the dynamics may see a change. "I expect it to be more of an earnings growth story than a re-rating story," he says. |
| "In 2005, we are positive on cement, capital goods, IT and banks. But negative on mid-caps in the B2 and lower segments, which are ruling at a P/E of 20-25x. Ideally they should trade at a discount to the market," notes Shukla. |
Explore Business Standard