Sei sulla pagina 1di 9

Year 2012 where do we go

Outlook 2012 Panic - Consolidation - Rally


Closing as on 30/12/2011 Yearly close Sensex - 15455 Nifty - 4624

Retail Research

Private Circulation Only

FLASHBACK 2011
2011 been a rather difficult year for the investors. A volatile year domestically and globally as well. On global platform - From Tsunami in Japan, unrest in Middle east, concerns on slowing US economy and emerging market growth to survival of the Euro region. Along with sharper than expected rise in inflation in the emerging markets prompting higher interest rates. On domestic front India has its own concerns which made it one of the worst performing economy. Concerns like a) inflationary pressures b) sharp rise in interest rates c) policy inaction by the government d) decline in Indian rupee e) widening fiscal deficit f) corporate governance concerns g) slowing demand and growth h) corruption issues. Our markets have corrected almost 25% from the yearly high of 6181 levels in Jan 2011. Emerging markets saw $47 bn outflow in 12 months. For BRIC countries the decade ends with a record outflows of $ 15bn. Break down of Euro currency which is currently trading at its yearly low is a concern.
Retail Research Private Circulation Only

Points to be noted
Are BRICs coming off their growth story..?? 21% Rupee depreciation
56 54 52 50
INR 48

Index loses in 2011 Country Index % of loss India Sensex 25 China Shangai Composite 23 Russia Micex 17 Brazil Bovespa 18

21% depreciation from its yearly low

46 44 42 40

For rupee 55 is the strong resistance breaking which 59 is possible


Brazil Russia China India $0 $1 $2 $3
In billion dollar

$5.30 $0.30 $3.60 $4 $4 $5 $6

Funds Flow in 2011: Emerging markets saw $47bn outflow in 12 months. BRICs saw ~$15bn

Retail Research

Private Circulation Only

Sector wise Report card CY11 All the sectors have shown a decline in their performance in CY2011 due to various concerns and issues relating to the economy, individual sector and so on. This further depicts the pain witnessed by the India Inc (corporate) as well. FMCG has only been a sector which has shown a positive performance being a defensive sector in nature.
Oil & gas Bankex Power Realty FMCG
9.85 10 0 % chg -10 -20 -20.18 -30 -40 -39.81 -50 -60 -47.61 -46.82 -51.30 -31.08 -16.88 -16.03 -13.22 -27.91 -33.38

Metal

Auto

20

Retail Research

Private Circulation Only

PSU

CG

CD

HC

IT

2012 A year of Dawn or Dusk..??


Beginning of 2012, a challenging year for global as well the domestic

economy. The start for the year, first 3 months will see lot of events lined up. To start with most of the rating agencies will declare their rating for European countries. The biggest event to be watched for. On domestic front the elections lined up in 5 states will come up in FebMar-2012 which will set the tone for further step by the government. Elections will be followed by Budget 2012 which is expected to be a populist one as it would be the last budget before the 2013 elections. As 2013 budget will be mainly on election expectations and results. Q3 results also will start off from Jan 2012 and with other events like budget and election, reforms will take a back seat. Lack of reforms and initiative from the government will continue to hamper the overall growth for the economy. More downgrades from the brokerages may be witnessed.

Retail Research

Private Circulation Only

2012 OUTLOOK - Fundamentals Year 2012 would be year of consolidation after making panic low, sectors like Infrastructure and Realty can surprise market while IT & Pharma will be very defensive in the year. The rupee weakness (up to levels 55 and may be above that to 59) is to continue which may further impact positively to the export oriented businesses. Stocks which have corporate governance issues, pledged shares, ECB loans or FCCB maturities may witness pressure. On the other hand Cash-Rich PSU stocks with lower debt on books and good quality management stocks will be preferred. After downgrades and a view of India being replaced by Indonesia in BRICs, its just a matter of time as after this bear phase rally we will enter the consolidation phase in 2012 and later 2013, market may see out performance. Gradually the domestic situations will also improve with government action taking place, softening of inflation and reversing of interest rates will support the out performance.

Retail Research

Private Circulation Only

Historical Sensex PE
PE Median 1SD down 1SD up sensex

55 50 45 40

22000 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 30-Jun-92 30-Jun-95 30-Jun-98 30-Jun-01 30-Jun-04 30-Jun-07 30-Jun-10 30-Dec-90 30-Dec-93 30-Dec-96 30-Dec-99 30-Dec-02 30-Dec-05 30-Dec-08 30-Sep-91 30-Sep-94 30-Sep-97 30-Sep-00 30-Sep-03 30-Sep-06 30-Sep-09 30-Mar-90 30-Mar-93 30-Mar-96 30-Mar-99 30-Mar-02 30-Mar-05 30-Mar-08 30-Mar-11 30-Dec-11

S E N S E X

P E

35 30 25 20 15 10 5 0

Looking at the history of 20 years Sensex PE hovers around the median of 18-19x. In couple of panic occasions the PE has also touched a low of -1SD i.e. 10-11x like (97-98-2008) which is lower than the historical median where the valuations become attractive. Currently the PE of Sensex is at 14.27x and if we are expecting sensex to go to levels of 11500-12000 in 2012 where we may see PE contraction around -1SD which is 10-11x that is mainly on domestic (corporate earnings) and global uncertainty.
Retail Research Private Circulation Only

2012 OUTLOOK - Technical


Sensex to move in the range of 11500 17700.

Nifty to move in the range of 3500 5400. Nifty and Sensex has closed below 200WMA on 3 continuous weeks which normally leads to more than 20% correction. This bear phase which will see very sharp and short lived correction may see a low of 3500 in Nifty and 11500 in Sensex. This may be experienced H1 CY2012. Later after the bear phase the market may see some consolidation phase followed by a rally which may see a high of 5400 in Nifty and 17700 levels in Sensex. These levels are possibly seen in the H2CY12. This rally will be mainly lead by the top 100 market cap stocks and cash rich companies mainly from PSU and MNC basket. 12 Stocks that look good for 2012 are SAIL, DIVIS LAB, CAIRN INDIA, NMDC, BEML, EIL, HEXAWARE, IPCA, HUL, INDIAN HOTELS, WIPRO AND OBEROI REALTY which can be bought in panic

Retail Research

Private Circulation Only

THANK YOU
30th December,2011

A.K.Prabhakar Shweta Prabhu CA Vivek Gujrati

Retail Research

Private Circulation Only

Potrebbero piacerti anche