Sudip Bandyopadhyay’s Blog

India is poised for exponential growth during the next 5 years.  This growth is expected to be significantly higher than the European and US economies.  Consequent upon this, India will continue to attract more and more investments from abroad.  Proportionately more domestic savings will also get channelised to the capital market both directly and indirectly.

Return of the foreign investors was the most significant development in Indian capital market in 2009.  Post the significant withdrawal of funds by FIIs in 2008, they poured money in Indian markets once again in 2009.  Realisation that India is amongst the very few market in the world which offers significant growth opportunities in the near future, has made the FIIs re-look at India.   Relative positioning of India amongst other global markets as an investment destination has significantly improved.

For an investor with medium and long term outlook, the investment idea for 2010 will definitely be equity.  In this space the investor should buy fundamentally strong companies which are aligned with domestic economic development.

2009 has been year of significant turmoil in the international and domestic markets.  Indian Stock Market  Markets going down to 7000 – 8000 level (BSE index) and coming back from there to 16000 – 17000 level (BSE index) during the year has highlighted the need for patience and value investing.  Price of acquisition has become the topic of discussion.  This trait is very clearly visible during the recent IPOs where the investors refused to participate in over priced / fully priced issuances.

While studying the companies, investors started to look at cost efficiencies which is again a significant change from the earlier perspective. Indian Markets will continue to enjoy significant liquidity during the year 2010. Propelled by increasing domestic demand and incremental infrastructure spend will take the growth of GDP to double digits.  The Indian corporates focussed on meeting domestic demand, will prosper and will get re-rated. All these will lead to significant improvement in the capital market index levels.  The Indian capital market will cross the previous peak and scale newer heights.