Raamdeo Agrawal of Motilal Oswal Securities gives a forward view on how 2007 will pan out.

He believes that the earnings momentum is unlikely to slowdown in 2007, which according to him is a bullish year. He says that Q3 earnings growth is seen at 45% (YoY). Agrawal is positive on Matrix, Kirloskar, Pantaloon, ONGC, RIL, IOC, Infosys, ITC.

Excerpts from CNBC-TV18’s exclusive interview with Raamdeo Agrawal:

Q: Walk us through the kind of expectations you have for 2007 - sectorally as well as stock-specific wise?

A: In 2007, the stock market has started off well. I bet my entire prediction or feeling about the stock market on the corporate earnings growth and that is the only thing, which we have in our hand in terms of a predictive tool.

So next year looks to be strong because we are seeing about 45% YoY growth in the December quarter, which is expected and which is going to be stronger than the September quarter. I don’t see the earnings momentum slowing down; so 2007 looks to be promising as far as the stock market movement is concerned.

Q: You have been coming out with wealth creation reports for the last five or six years. Could you take us through the winners this year?

A: The fastest winners this year have been Matrix Labs, Kirloskar Brothers, Pantaloon Retail, Aban Offshore, National Mineral Development and amongst the bigger ones there are ONGC, Reliance, Indian Oil, Infosys and ITC. Among the most consistent ones there are Ranbaxy Labs, Hero Honda, Wipro, Dr Reddy’s, Cipla, HDFC, ITC, Satyam Computers, Infosys, and Nicholas Piramal.

Q: In a typical portfolio of a person starting out may be in his 30s with a decent risk appetite, how much should he focus on your wealth creators and how much should he look beyond wealth them for short-term gains? How does one choose your wealth creator model in deciding on a portfolio?

A: The Wealth Creator Model is basically picking a winner and how to find the winners' characteristics. There could be stocks outside my study, according to which 600 companies have created wealth of more than Rs 100 crore. This study tends to pick up the largest wealth creators.

Basically we try to look at characteristics of the companies, which have created wealth in the recent past. So when we pick up stocks for the future, we should keep in mind these characteristics, which will help in finding the next wealth creating company for one’s portfolio.

So may be I can start with 15 companies, none of which belong to the current list, but have those characteristics right now. So hopefully in the next five to six years, we find bulk of those companies not only among the biggest wealth creators but also the fastest ones to create wealth. And if that happens, one could get a return of up to 50-60% compounded.

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