FIIs to augment liquidity largely: DSP ML

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In tune with most investment advisors, Sanjay Sharma of DSP ML says that the bullish trend in India will continue through 2007. He says that there is enough liquidity to absorb all the new offerings in market.

 

He believes that FIIs would continue to be large contributors to liquidity, and that flows from domestic institutions and retail investors will also increase.

 

Moving on, he expects to see a good number of real estate and infrastructure IPOs this year.

 

Excerpts from CNBC-TV18's exclusive interview with Sanjay Sharma:
 
Q: How do you see 2007- the year ahead?

 

A: On the back of three years of a good primary capital market run, I think the bullish trend will continue in 2007 as well. We saw companies raising close to USD 15 billion out of the capital markets last year and I wouldn't be surprised if we would meet almost the same number this year.

 

Q: Do you see liquidity follow this, because you are seeing liquidity come into secondary markets? Is there enough liquidity to absorb all this?

 

A:  Yes, because I think liquidity from foreign investors or domestic investors as well as retail comes in for investments and stocks and whether it is primary or secondary and that is something, which will find its own equilibrium. I don't see a large number of IPOs or private issuances having much of an impact on the secondary market.

 

Q: You mentioned that liquidity is going to be the key factor to watch out for in 2007. How do you gauge the way liquidity will flow and the key drivers there? Will the domestic fund flows be the leaser or do you think FIIs would step up buying?

 

A: In the last couple of years the domestic mutual funds and the domestic institutions have really been catching up. Having said that, I think the large contributor to liquidity would continue to be FIIs, but the domestic mutual funds and institutions would start becoming an important factor going forward.

 

Q: Which are the IPOs you will be watching out for?

 

A: We will see a lot of IPOs from the real estate sector as well as the from the infrastructure segment. DLF's offer is being talked about as the largest one coming, but the document is not filed yet. So I won't comment.

Broadly speaking, one could look at DLF from the real estate sector, Idea from the telecom sector and also First Source Solutions Limited, the first BPO sector to enter the market.

 

Q: What is the general outlook for these companies?

 

A: I think all the three companies as well as the sectors are doing well and investors will make lots of money investing in these IPOs.

 

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