Prosperityinvestment

Indian Equity – a sea of opportunity
The good news is that most of the global economies have come out of the recession. The global recovery will be much slower than anticipated due to the following factors. During the last 5 years+ most of the consumer spending of developed economies have come from borrowed money or through artificially inflated asset prices. Going forward there will be more of savings than spending from the developed economies. The stimulus package offered by the treasuries of the global counties will be withdrawn slowly over a period of time. Most of the cost cutting by companies in the developed world will result in off shoring of jobs to emerging markets like India resulting in increased unemployment/underemployment in developed economies.
Impact of global recession in Indian economy:
2008 was the year of cost rationalization / cutting resulting in increased efficiency and productivity to meet up with the global competition Most of the companies bottom line has shown a remarkable increase due to reduction in operation expenses. Most of the commodity prices including crude & base metal resulting in reduction in the production cost. There was a considerable in global trade resulting the reduced export and also import.

	The inflation came down to – due to the base effect resulting in lower cost of borrowing.
	Barring a few areas like shipping and export the activities in Indian economy largely remained unaffected. On the contrary Indian companies have benefited the most by way of cost cutting and off shoring by large companies from the global economies into India. The major positive for India is domestic consumption story. With the economic activity picking up from the 3rd quarter we see much better performance by Indian companies going forward.
	What to expect from Indian equity market:
	We are from the camp who believes that we are in the beginning of the mother of all bull market and we are in no way closer to the peak. We will see gradual up move in the Indian equity market over the next 5 year albeit correction at various levels. We believe in India fundamental story and out sector & stock selection will be purely based on the future expectation.
	The major driver of Indian Equity market:
	Wall of liquidity from FIIs gushing into emerging markets. Change in the attitude of investors from Risk averse to Risk appetite (Investors are moving out of bonds and investing in equities & commodities). Sharp increase in economic activity is reflected in higher recruitment, increased salaries, higher IIP data and expectation of higher GDP numbers. Sharp increase in economic activity is reflected in higher recruitment, increased salaries, higher IIP data and expectation of higher GDP numbers. Expectation of higher quarterly numbers from corporate resulting in upgrading by research houses. We expect IT to positively surprise the market.
	Hot picks for the current Quarter (Oct-Dec 2009)

	We are bullish on Sugar & tea for the current quarter. We believe that demand for both the products have outstripped supply both globally and in domestic market resulting in escalation of price by the suppliers. The landing price of sugar at zero import duty will be higher than the domestic price of sugar clearly portrays the serious demand-supply mismatch globally. Technology can throw positive surprises including upward revision of earnings provided they see a stable currency due to large outsourcing contracts from global majors. The earnings for the quarter ending Sep 2009 will have positive surprises for the following stocks . Sakthi Sugars-Rs.86.75 · Bajaj Hindustan-Rs.181.75 · Balrampur chinni Rs.126 · Mcleodrussel Rs.212 · Jayshree tea-Rs.296 The prices quoted for the above mentioned shares are as on 06/10/’09. We expect a minimum return of 25% if you stay invested in the above stocks for the next 3 to 4 months.
	Show Stoppers:
	Sharp increase in Inflation will lead to increase in cost of borrowing resulting in lower profit for companies. Sharp increase in commodity prices including crude & Base metal will increase the cost of manufacturing. Sharp appreciation of Indian rupee against USD can play against the software and textile industry.