16,000 dream is alive

BS POLL

Bloodbath fails to dampen long-term sentiments.

The 16,000 dream is still alive. After spending a brief period at their peak levels and knocking on the doors of the 16000 territory, the stock markets are witnessing a turmoil.

But, driven by the unparalled India story, they may enter the level at the end of 2007, according to a Business Standard survey of market participants.

However, equity experts are divided over the immediate as well as the short-term outlook as most of them expect the market to be volatile for some more time.

The survey, comprising top executives of leading 18 brokerages, showed that despite the recent hiccups and value erosion, following weak global trends and sell-offs, the Bombay Stock Exchange (BSE) Sensex could end the calendar year at the 16,000 level.

Out of the 18 executives surveyed, ten said the benchmark index would recover to its July peaks before the year-end, and a few even expect it to end above the 16,000 points.

However, the equity experts hold different views on the immediate as well as the short-term outlook of the market. But most of them expect the volatility to continue for a while. Banking, capital goods, infrastructure and related sectors emerged as the most reliable areas to invest.

"We don't think the market will fall further. If you look at the scenario 3-4 days back, there was too much of uncertainty. But now things are changing. The China Bank is likely to pump in huge amounts of money into the US market. The central banks are playing a bigger role to deal with this turmoil. At some point, Indian as well as Asian markets will definitely stop moving in tune with the global trends and stand by their strong fundamentals," said Ashutosh Agarwal, head, business development, Sumedha Fiscal Services.

According to Agarwal, investors should pick up stocks such as banking and capital goods, which are an important part and the key drivers of the India Story.

The executives expressed mixed views on the immediate movement of the market. Most of them said they expect the market to go down further and saw the Sensex getting support at the 13,800 point level, which is nearly 250 points below its Friday's closing of 14,141 points.

Some said the broadbased Nifty could even touch the 3,600 point level (nearly 500 point below the Friday's close of 4,108 points), signalling the continuation of the roller-coaster ride for investors and asked them to fasten their seat belts by sitting over handsome cash levels.

Vibhal Kapoor, the chief investment officer of IL&FS, however, advised caution. "If the global cues force the Sensex to trade below the 13,800 point mark, then there could be big fall. It can even see the 12,000 point level," he said.

"Investors should look at buying for the long-term. The market looks choppy only for the day trader. It is recommended to buy good companies at bargain prices for the long term," said Harendra Kumar, research head, ICICI Direct.

The experts also said the stocks related to infrastructure were a safer bet and could gain on the long term. However, few such as Agarwal said this correction had given the investors an excellent opportunity to buy stocks such as Tata Steel and Reliance Energy, which have faced the bigger brunt of the global turmoil but are fundamentally strong.

Amitabh Chakravarty, president (equity), Religare Enterprises, also proposed a cautious approach. He said: "Book profit where there is, raise cash to 15 per cent."

On a two-month short-term outlook, most of the experts said they expected the markets to recover and compensate the losses to some extent.

"If FIIs continue to sell, we will see a large amount of sell-off in large caps. Volatility will be high. But we are not overtly negative on the Indian market," Amar Ambani, vice president (research), India Infoline, said.