Making money from stocks may be tougher in 2008. Running uphill for four consecutive years, the bulls are expected to take a breather next year owing to slower global growth, inflationary pressures and volatile crude prices.
“We believe global growth will moderate to an average 4.5 per cent in 2008. Risks to equity markets include inflationary pressures and volatile crude prices. Our baseline return estimate for the Sensex is 25 per cent,” said Arindam Ghosh, CEO of Mirae Asset Global Investments.
In calendar year 2007, while the benchmark Sensex of the Bombay Stock Exchange beat forecasts gaining 45 per cent to end at 20,287 points, the 50-share Nifty of the National Stock Exchange gained 27.4 per cent to close the year at 6126.50 points.
Making money is set to get harder as the rally may turn narrower in 2008. Experts think market movements will be extremely stock specific in the year ahead. Thus, investors are advised to stick to the basics of stock picking and go for fundamentally strong stocks rather than opt for momentum plays.
“The broad market may go in for a consolidation. There will be stock specific activity based on value unlocking. One should go for companies that can unlock value by scaling up to the next level of business. Investors are advised to stick to conventional methods of stock picking based on earnings growth,” said A Balasubramanian, CIO of Birla mutual fund.
However, much depends on fund inflows into Indian equity markets.