Pratik Gupta, Head-Equities, Deutsche Bank Group, said risk appetite has improved in Asia, but fundamental outlook still remains challenging. “I don’t see any domestic triggers driving Indian markets, but global factors will.”
The overall economic outlook looks uncertain but markets are not in a full blown bear phase, Gupta said. He added the markets are unlikely to go back to their lows and would be in a trading range.
Gupta believes the global economic data is also not as bad; however, the market upside looks limited.
Gupta said the worst of US economic contraction seems to be over and recovery will begin in 2010.
Sustainable recovery in Indian markets, Gupta added, is dependent on positive earnings momentum. “Sustainable rally will start in late 2009 and now its time to watch for elections and monsoon."
Gupta said money flows will improve and capital issuances will increase going ahead. Foreign institutional investors (FII) flows turning around has been biggest catalyst for the current rally, he added. He believes the Sensex could touch 11,500 by 2009 end.
Meanwhile, talking about the sectors and the companies one should invest in, Gupta recommends a defensive portfolio ahead of elections, which can add more beta to portfolio towards the year-end, however, Gupta advices to avoid companies with high leverage.
He feels midway through deleveraging processes are unlikely to end in near-term.
According to Gupta, fundamental outlook for realty remains negative with high debt on books of the realty companies. Besides, he has neutral rating on IT sector. Gupta believes operating cash flows and balance sheet of IT companies are very strong and on a relative basis IT sector could outperform.
Sunday, April 19, 2009
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