Bulls are back, feel mkt players

Bulls are back, feel mkt players
The Times of India, April 16, 2009, Page 15

Smell Of Recovery, Attractive Price-To-Earnings Ratio Wooing Investors

Prabhakar Sinha & Partha Sinha TNN

New Delhi/Mumbai: The prolonged bull rally in the stock markets, taking the 30-stocks sensitive index over 11,000 level on Wednesday, is driving home one point — the market is on a recovery path.

‘‘The worst is over,'' said Shitin Desai, executive V-P of DSP Merrill, airing the market sentiment. The market seems to have bottomed out, added Vijayan Krishnamoorthy, CEO of JP Morgan Asset Management Company.

However, fund managers feel that the current rally will not continue for ever and the sensex will be range-bound — between 10,000 and 12,000.

Among the positive factors, institutional investors are back in the market. In April so far, FIIs' net buying position has gone up to Rs 443 crore as against Rs 131 crore in March. In the first two months of 2009, FIIs sold shares worth over Rs 1,650 crore. Even domestic mutual funds have started buying in the market. A senior fund manager said that domestic funds have been buying since middle of March. In March, net buying position of them was 1,477 crore. However, in April they are little cautious and not buying agressively as market continued to rise. Fund managers said that they were confident and investing in the markets at all level.

Insurance companies continued their buying spree. Senior V-P of ICICI Securities Ravi Sardana said that market would remain volatile and provide good opportunity for the savvy investors. He said that investors should put money in good stocks in select sectors to reap benefit of future rally.

Another fund manager said average price to earning ratio of around 15.5 of sensex stocks could be considered as attractive valuation, particularly as the companies are showing a positive growth in their profitability. Contrary to this, most of the companies in the developed world are showing losses. Therefore, the fund managers feel that foreign funds will start flowing into the Indian market once the political uncertainty ends.

Desai said once the government is formed, the inflow of foreign funds will increase. Krishnamoorthy added that the combined approach of the G-20 countries' leaders in containing the recessionary trend in the global economy provided the confidence to investors.