The stock market is expected to witness a negative bias in the the first half of 2011 but will pick up up later, with the Sensex likely to remain in a range of 16,000-20,000 points during the year, leading brokerage firms have said.
"We expect the market to trade with a negative bias in the first half and to move up toward the end of the year. So expect the markets to be in a range of 16,000-20,000 for the current year," Angel Broking Chief Investment Officer Rajen Shah said at a seminar on Investment Opportunities jointly organised by Angel Broking and the Bombay Stock Exchange here.
The seminar was a part of Angel Broking and the BSE's ongoing countrywide initiative on investor education.
Retail investors need to be cautious and disciplined in stock-picking. The focus should be on value and investing in companies with good management and businesses, Shah said.
Speaking on the occasion, Angel Broking Chairman and Managing Director Dinesh Thakkar said, "Given our retail-centric orientation, we are confident that through this alliance with BSE, Angel Broking can further leverage its strong research strength to reach out to a wide spectrum of investors."
So far in 2011, the Indian markets have been on a downward trend, shaving off almost 10 per cent, on the back of persistent inflationary pressure, which is expected to result in a slowdown in economic growth.
However, a look at history suggests that Indian equity, as an asset class, has been the most rewarding. Buying during downturns in the market have provided good returns, Thakkar said.
On the economic front, while developed economies can grow at a real 2 per cent GDP on the back of innovation, emerging markets like India, which are behind in the innovation curve, can sustain a real GDP growth of 8 per cent, resulting in corporate profits growing by 15-16 per cent, Thakkar said.
Thus, after the correction, the Indian markets are trading close to an earnings yield of 7 per cent, promising handsome returns for investors, he said.
The concerns on the inflation front are also likely to subside as inflationary pressures are more driven by supply side issues on the food front, Thakkar said.
Furthermore, with the valuation gap between the developed and emerging economies narrowing down, FII inflows toward India should resume. Hence, at this juncture, Indian equities are well poised for an uptrend, Thakkar said.
"As our markets evolve, a growing number of investors are looking at adding options to their investment portfolios. We believe that increasing awareness of the benefits of investment opportunities through training and education is a critical responsibility in our efforts to grow our markets," BSE Managing Director and CEO Madhu Kannan said.
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