Sensex likely to be at 24K by year-end: JPMorgan

Experts are bullish on Indian markets, even though the year kick-started with tepid volumes and just about a modest price appreciation. Kalpana Morparia, CEO, JP Morgan is expecting the Sensex to be at 24,000 by the year-end.

In an interview to CNBC-TV18, she said, “We certainly believe that we are in for a 20% increase. If you then factor in a slight appreciation in the rupee, we would probably see returns for foreign investors in excess of 20%.”

On an optimistic note, she continued that qualified institutional placement (QIP) pipeline is likely to continue to be strong in 2011.

Here is the verbatim transcript of her interview with Udayan Mukherjee and Mitali Mukherjee on CNBC-TV18. Also watch the accompanying videos.

Q: What is your sense of how things might pan out for Indian equities in 2011?

A: I see a good year. Last year, JP Morgan had called, if I remember in January, that we will end the year with Sensex at 20,500 and we were bang on. This year the expectation is Sensex at 24,000. So, we certainly believe that we are in for a 20% increase. If you then factor in a slight appreciation in the rupee, we would probably see returns for foreign investors in excess of 20%.

Q: It was a great year in terms of primary market action as well and this year it’s not just pubic money or public paper, some private issues are lined up as well. What kind of primary market pipeline do you foresee for 2011?

A: Currently, the pipeline is about USD 10 billion for the private sector dominated by power and real estate. Assuming an USD 11-12 billion of public sector disinvestment coming in, you are already looking at a pipeline of USD 20-22 billion. As we progress in the year, I am sure we will have additions to the pipeline as companies move into investment phase there will be capital raising for growth.

Q: What do you sense the appetite is like for the sectors that you just mentioned, spaces like power and energy?

A: As I have said in the past India is one of the few countries in the world, if not the only country, where we are powered by twin-engine of consumption and investment. Therefore, you have seen a pretty significant rally in all the consumption sectors. Clearly, given the large investment pipeline particularly in infrastructure, that should continue to attract more capital raising and investor appetite as well.

Q: 2010 was good for foreign institutional investor (FII) inflows, we got USD 29-30 billion nearly albeit a third of it went to primary issuances. What is your expectation on that front for 2011, all things considered globally?

A: I certainly believe that we should beat that USD 29 billion this year, global liquidity continues to be very good. If you look at the overall allocation of money to global emerging markets, it is still quite small, less than 10%. In fact even if you were to add country dedicated funds on top of that, it’s still a significantly small proportion of the overall pool of global capital.

India with its growth trajectory of 8%, I see no reason why this should cool down. Even assuming there is a pickup in the other developed markets more notably the US, I still believe that there will be some rebalancing towards the global emerging markets. I believe also that if in the course of this year we see rebasing of MSCI emerging markets, Asia particularly, there is talk about Korea getting out of MSCI index, India will be a significant beneficiary in terms of higher weightage there.

മുഴുവനും വായിയ്ക്കാൻ