Sensex may retest 10-12K levels

Marc Faber, Editor and Publisher of The Gloom, Boom & Doom Report, said he saw a correction of 25-30% in equities and that he expected the Sensex to retest 10000-12000 levels. “Markets will correct as it becomes evident that the economic recovery is not as rapid as expected.”

The US Federal Reserve will throw more money into the system as the economy deteriorates and so it would not be very favourable to be long on the US dollar, Faber added.

On commodities, Faber said that prices would continue to go up in the next couple of years, regardless of the global scenario as the supply of commodities could not be increased.

“Commodity prices will find support due to excessive quantitative easing by the US and the global commodity prices will rise if economies improve.”

Sensex may move towards 21,000 by 2011

Ruchir Sharma, said that he saw a new bull market rally where the market would once again hit its highs at 21,000 on the Sensex. "I think the base for that will be set in the middle of next year or so." Sharma said he would be surprised if Sensex touches 21,000 before 2010-end, but was quick to add that the Sensex may move towards 21,000 by 2011.

In an excusive interview with CNBC-TV18 Ruchir Sharma, Head of Emerging Markets at Morgan Stanley Investment Management, Sharma said that he expected crude to be towards USD 30-40 per barrel more than being at USD 80 per barrel a year to 18 months from now as forward markets or lot of the bullish consensus tend to currently imply.

He said that the Indian markets were currently in a cyclical bull market and that he saw a real bull market only by 2011, where he said the Sensex was likely to hit 21,000. When asked what a cyclical bull market meant, he said, “A bull market means that you’re starting a new era where the highs of the old bull market are going to be taken out. Instead there is a middle path, which is what we call a cyclical bull market within a structural downtrend.” However, Sharma added that by the year end or next year, the market would come down again as the structural problems had not yet been cleared.

The market breadth was in favour of declines

The market breadth was in favour of declines; 451 shares advanced while 814 shares declined. Profit booking was seen in oil & gas, power, capital goods and banking stocks along with SAIL and DLF.

The Sensex tumbled 211 points, to 14,629 and the Nifty lost 71 points, to 4,459, at 13:04 hours IST. The broader indices like BSE Midcap and Smallcap indices fell 1% each.

On the sectoral front, BSE Bank, Power, Realty and Oil & Gas indices fell 2-2.9%.

Ranbaxy Labs, Reliance Infrastructure, Jaiprakash Associates, NTPC, HDFC Bank, Suzlon Energy, PNB and Axis Bank were top losers, went down 3-7%.

Essar Oil, Satyam (jumped over 11%), Unitech, DLF, HDIL, ICICI Bank and Reliance Industries were most active shares on the bourses.

Mkts extend losses: power, banking , capital good space slipped 1.5-5.5%.

On the sectoral front, BSE Bank, Power, Realty and Oil & Gas indices fell 2-2.9%.

In the banking space, Kotak Mahindra, Axis Bank, PNB, HDFC Bank, SBI and ICICI Bank were down 1.7-4.9%. Among the oil & gas stocks, HPCL, IOC, Reliance Industries, Reliance Petroleum, BPCL and ONGC fell 1.3-4.6%.

In the capital good space, Suzlon Energy, Siemens, Punj Lloyd and ABB were down 1-4%. BHEL and L&T declined marginally.

In the power pack, GVK Power, Reliance Infrastructure, Tata Power, Torrent Power, Reliance Power, Areva T&D, NTPC and GMR Infra slipped 2.5-5.5%.

Sensex target at 19500: Morgan Stanley Bullish on India

Chetan Ahya of Morgan Stanley said “Currently, I am most bullish on India, bull case target for Sensex was of 19,500, though I can’t say the same for the other global markets.” Read More ....

Ridham Desai, MD and Head-Equities, Morgan Stanley was ‘overweight’ on the consumer discretionary sector and had removed ‘underweight’ on financials sector. Read More....

Sanjay Shah of Morgan Stanley said that the incremental interest in India was coming from long-only large hedge funds. Read More....

Jonathan Garner of Morgan Stanley said in an interview today to CNBC-TV18 that though the bear market was probably over in Asian and emerging markets, Read More....

India's current valuation premium of 30% is justified

Jonathan Garner of Morgan Stanley said in an interview today to CNBC-TV18 that “India's current valuation premium of 30% is justified and is still on par with the long-term averages. The government’s actions are needed to maintain India's premium at current levels.”

He though the bear market was probably over in Asian and emerging markets, he couldn't say the same about the West. "We have upgraded India to ‘overweight’. Year-till-date (YTD), various emerging markets had seen inflows of over USD 40 billion," he said.

Fundamental turnaround will depend on government moves

Ridham Desai, MD and Head-Equities, Morgan Stanley was Speaking on India’s gross domestic product (GDP), he said he was expecting a GDP growth of 6.2% in FY10 and 6.8% in FY11. “The street may be under-estimating earnings growth,” he said, adding that the bull case scenario called for significant upside on government action.

Ridham Desai, MD and Head-Equities, Morgan Stanley was ‘overweight’ on the consumer discretionary sector and had removed ‘underweight’ on financials sector. He said for the first time in two-three years, India was able to attract money on its own fundamentals. “Fundamental turnaround will depend on government moves,” he said.

If the government came out with infrastructure reforms, removed certain taxes in budget, the markets may go back to their old highs, he said, but added that the probability of the markets touching new highs was not very high at this point. “If global markets go under stress, India will find tough to deliver absolute returns,” he said.

midcaps continue to outperform selectively,

Sanjay Shah of Morgan Stanley Commenting on midcap outperformance, he said that the improvement in the economy and credit availability had led to midcap outperformance. “We may see midcaps continue to outperform selectively,” he said. According to him, India was benefiting from the rebalancing of BRIC (Brazil, Russia, India, and China) funds.

Sanjay Shah that the incremental interest in India was coming from long-only large hedge funds. "It was commendable to see the markets consolidate and digest 17% gains post the election results. We expect further participation in Indian markets from long-only funds," he said.

Chetan Ahya of Morgan Stanley bull case target for Sensex was of 19,500,

Chetan Ahya of Morgan Stanley bull case target for Sensex was of 19,500, “Currently, I am most bullish on India, though I can’t say the same for the other global markets.”

Commenting on India’s GDP, Chetan Ahya of Morgan Stanley said India’s GDP forecast was at 6.2% for FY10 and 6.8% for FY11. The organization had upped India's GDP forecast twice in recent weeks. “Current GDP forecasts don't factor in strong reforms. GDP forecasts may be upped if the reforms are undertaken,” he said. He expected two-stage boost for the Indian economy post elections. “Political stability will boost capital flows and will heal corporate balance sheets,” he added.