Sublime Consulting

Indian markets continued the bull run for the fourth straight year with 46% returns
in 2006.
FII flows in the Indian equity markets for the year 2006 stood at $ 8 billion
compared to $ 10 billion in 2005.
Domestic mutual funds contributed $ 3.5 billion. It is 17% higher than last year.
This is a healthy sign which indicates that more retail investors are entering the
equity market through mutual funds.
Tough to time correction in the markets, especially for the first few months.
Data and Analysis points to India in the over valuation zone.

According to Morgan Stanley estimates markets could have a downside of 18%
and an upside of 21%.
Various external and internal factors could contribute to the downside..
The key ones are possible U.S. slowdown in 2007, interest rate sensitivity, geopolitical
risks, liquidity squeeze, oil factor etc..
But the broad consensus[estimates by brokerage houses] is that the corporate
earnings growth will be in the region of 30% for FY2007.
Data and analysis points to aligning one’s portfolio predominantly to large caps
and select mid caps stocks/funds.
Overall.. the long term equity story for India is intact and one could get
reasonable returns [with a time horizon of 2-3 years] by holding investments predominantly
in large caps and in select mid /small cap stocks/funds.
On the flip side.. will we[Indian Stock Markets] show the money in 2007!?
Time will tell..