SENSEX NIFTY
Jan 02, 2013, 09.49 AM IST | Source: CNBC-TV18

2013 to be a happy year; Sensex may hit 21000: HSBC AMC

In an interview to CNBC-TV18, Tushar Pradhan, CIO of HSBC AMC says the market may see a new high in 2013. "I think that is partly due to the fact that even a very simple mid-teen growth from hereon will take you there because the past peak was about 21,000," he elaborates.

After rallying over 25 percent in 2012, the Indian market has begun the New Year on a strong note. The Sensex ended at 19,580, up154 points. The Nifty rose 46 points to close at 5,950.

The market gained on the 'fiscal cliff' news from the US. The fiscal cliff pressure on the US has eased as the Senate voted in favour of a deal that raises taxes for the wealthy. The Senate voted 89 to eight in favour of the deal in a bid to avert the fiscal cliff. The proposal will now go before the House of Representatives. 

In an interview to CNBC-TV18, Tushar Pradhan, CIO of HSBC AMC says the market may see a new high in 2013. "I think that is partly due to the fact that even a very simple mid-teen growth from hereon will take you there because the past peak was about 21,000," he elaborates.

According to him, the timing is pretty critical because many events are likely to unfold this year. "They could either take it up quickly or it might have to be a lot more patient wait before we get there," he adds.

New year 2013: Market may give 15-18% returns by Feb-end

Below is the edited transcript of his interview on CNBC-TV18.

Q: Do you believe that the market is set to touch its new highs, perhaps even in the first quarter of calendar year of 2013 or do you think it will have to be longer?

A: I do not know exactly when it will be. But I do believe that there will be a new high. I think that is partly due to the fact that even a very simple mid-teen growth from hereon will take you there because the past peak was about 21,000. So, that isn’t too much from here.

But the timing is pretty critical because many events are likely to unfold this year. They could either take it up quickly or it might have to be a lot more patient wait before we get there.

Q: What about earning season? What is your expectation? How much of a trigger do you think it could be for the market?

A: I think earnings are going to be pretty flat, around 7 to 8 percent growth. Even next year, 12-month, growth is somewhere between 13 to 14 percent. So, the market seems to be going up clearly not on expected earnings growth, but obviously on something else. I think this something else is possibly an expectation of either reforms push, or continued global liquidity. That is worrying.

The fundamentals are not showing that the earnings are going to go through the roof. We do not see a clear change in the investment climate. We do not really see an investment cycle beginning. The optimism obviously in the market is there for some reason, but clearly not earnings.

Q: Do you think retail investors, who haven't participated in the market yet, should wait and watch for more triggers to pan out or is this a good time to put some money at work?

A: It is always a good time to put money to work in the equity market at any given time. However, one has to realise that it is going to be held for a longer period of time. That is when the returns come. So, if one is likely to time the market then it may not work out the way that most investors would want it to.

The clear point to be made here is that if you look back, in the last 12 months we have made a return of close to 27 percent on the Nifty. Going forward, if earnings growth remains between 10-15 percent at maximum, we already have had a year where the growth in the market has been twice of that as the earnings growth already. That means that the market has been rerated.

Now, do we expect further rerating from here? I think that is unlikely. That means one should be accepting the fact that reasonable returns can be expected out of the equity market, nothing out of the ordinary. Here ordinary is still good. We are talking about 14-15 percent return. That is very likely to happen, given the fact that we are in a situation where we have already made about a 30 percent gain over the previous year. So, retail investors should be well informed about what they need to do, given the risk situation. But it is just as fairly valued as one can think. If one has a longer term objective then this year is as good a year to start investing in equity. 

Q SEBI Regulations for Mutual Funds was formulated in:
1 2

ADS BY GOOGLE

video of the day

Retail buyers, MFs are back; midcaps hold promise: Ambit

Explore Moneycontrol

Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.