Centrum Sec sees Sensex at 22,000 by 2010 end

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The Sensex has closed below the psychological 17,000 mark and the Nifty has closed just above 5,000 with most experts expecting the Nifty to close around 5,100 on expiry day. With a fall in global markets weighing on Indian equities, how are investors reading the development in the markets?

In an interview with CNBC-TV18, Dan Harwood, CEO of Centrum Securities (Europe), gave his perspective on the market and his outlook.

Here is a verbatim transcript of the exclusive interview with Dan Harwood on CNBC-TV18. Also watch the accompanying video.

Q: Will we enter into the New Year with most of these gains built on? Do you see further gains in equity markets around the world in developed and in emerging markets?

A: Certainly for the time being, there are such levels of liquidity that we would see the markets holding these levels and probably going higher.   

Q: The liquidity that you referred to is unlikely to go away anytime soon. The kind of gross domestic product (GDP) numbers or contraction we saw in the UK even in this morning's numbers all indicate that perhaps the liquidity supply will be kept by the central banks. How would you expect this to pan out in mid-2010 with fundamentals perhaps not improving but stock prices at least in emerging markets raising ahead? Do you see this ending in some kind of a serious steep profit taking sometime in the first quarter of next year?

A: I think it's hard to say at the moment. The central banks have got a job to do here and that's to rebuild the banks' balance sheets. And they are doing that obviously by using the yield curve and their past experience. We have had crises before not necessarily as big as this one.

Where that leads ultimately is very hard to say. Obviously there are lot of question marks about 2010-2011 in terms of economic growth in the West. And there is more optimism in this part of the world and growth rebound is better.

Now whether that translates into the markets having a serious correction, I think it's very hard to say at the moment. Obviously there is a lot of froth around, they have had a significant rebound. And I guess it will boil down to how quickly either rates have to go up or how the real economy reacts to that. At the moment obviously the results are all in financial assets of various sorts.

Q: I understand you have a Sensex target of 22,000 by end of 2010, is that right? Are you so bullish on Indian markets?

A: Yes, we at Centrum have that target. Whether it's a straight line getting there is another matter. But certainly we are broadly optimistic. As you well know, a year ago more or less to the day we were sitting here and we had the Sensex at about 8,000. We were looking for that to broadly double and obviously it surpassed that. So yes, we are optimistic.

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