The year 2007 will be the year of consolidation. The market will not keep zooming as it has done lately, specially this year. Market analysts are projecting that returns will moderate, in the range of 10-20 per cent.
Top broking houses estimated a 12-30 per cent upside for the market, compared to at least 35 per cent returns the benchmark BSE Sensex has given over the last three years. In 2006, the notional return has been over 43 per cent.
Lalit Thakkar, Director-Research of Angel Broking said the index would move in the range of 12,600-15,000 in 2007. Thakkar was sure that equities would give 15-17 per cent return in the long run.
A Balasubramanian of Birla Sun Life agreed that the coming year will see consolidation. Sreesankar R, Head-Research of IL&FS Investsmart too settled for an upper limit at 15,000 points, but kept the lower limit at 12,000.
But there remains worry about corporate performance. "Corporate earnings have been growing at 20-23 per cent for the last two years. The market may follow this trend in 2007. But if corporate performance fails to meet market expectations, the market may fall by about 20-25 per cent," Ramdeo Agrawal told the Hindustan Times.
In a note titled 'India Strategy' Kotak Institutional Equities projected that the Sensex would be in the range of 12,600-15,100, based on fiscal 2009 earnings.
Harendra Kumar, Research head of ICICIdirect.com was the most optimistic. "Going by our estimates, we have a target of 16,700 points levels in the next 12 months for the Sensex. This will have a return potential of around 25-30 per cent," he said.
However, nobody was pessimistic about the economy, one of the critical factors for forecasting market performance. Almost all the research heads and senior market analysts were of the view that the economy would sustain its over 8 per cent growth pace in 2007. They only hope that problems like spiralling crude prices and global interest rate hikes will not get worse.