." He strongly feels stabil¬ity in the global markets is crucial for the Indian markets to surge higher fol¬lowing diminishing global risk appetite. W

"Decoupling of the markets will only come in the long run, but, temporarily, India will follow the Asian
and global markets"

DEEPESH PANDEY Co-head Investments, IIFL Capital Pte
"The key risks to the emerging markets are overbought conditions and potential renewed global risk aversion rather than valuations"
MAHESH PATll
Equity Co-Head,
Birla SunUfe MF
growth by 3.8% in 2009 and grow margin­ally by 0.6% next year. Valuations, too, are not that expensive than peers. India (Nifty 50) trades at 16 times compared with 14 times of the US market (S&P 500).
It may not be a run-away market from here on as the shares prices have risen too fast. But it is also true that the fall will not be a landslide. After all emerging markets are no more weak economies. "China, Taiwan, Indonesia and Brazil are some other mar­kets than India one can bet on with a two­three year view," says Patil. Pandey feels the "decoupling of the markets will only come in the long run, but, temporarily, in the short term, India will follow the Asian and global markets." Adds Sinha: "From here on, the Indian markets will move in tandem
Though inflation rose a negative 1.21 % per annum in the week ended 4 July 2009 it is set to rise shortly

with the global markets, which would, in turn, dictate the portfolio flows into the country." He strongly feels stabil­ity in the global markets is crucial for the Indian markets to surge higher fol­lowing diminishing global risk appetite. With triggers withering away, India will have to take a cue from the global mar­kets. Till date, the fiscal deficit of 6.8% of GDP and monsoon are concerns. Also, from deflation, the economy is set to see inflation. In the last week ended 4 July, inflation rose a negative 1.21 % per annum as against a de-growth of 1.55% ended 27 June 2009. "Irre­spective of monsoon, policy announce­ment of the government and corporate results, stable global markets will dic­tate the trend ofthe Sensex," says Sinha.
Meanwhile, fund managers seem to be confident ofIndia's growth. "Given India's agriculture share as a percent­age ofGDP has shrunk to nearly 19%, defi­cit in rainfall and its impact on economic growth is unlikely to be significant," says Patil "The growth outlook remains robust, driven by rising consumption (government's focus on inclusive growth) and investment (stable political environ­ment). Going forward, there is a greater chance of earnings upgrades than down­grades". However, Pandey prefers to be cautious: "The coming two-three weeks are crucial for the Indian markets. The Index of Industrial Production numbers were a sur­prise, but other factors have to be consid­ered before we can come to a conclusive judgment about the Indian markets." Inves­tor should look out for how the monsoon pans across the country, manufacturing numbers, fiscal deficit and inflation as these will play important roles before the mar­ket start discounting the September 2009 quarterly numbers.
In short, the Indian markets are not in a hurry and will not be going anywhere. "The Sensex will move in a band of 12,500­16,000," says Pandey. Industrial indicators are positive. India Inc is also talking about increasing investment and the government has announced ramping up spending on in­frastructure including roads and ports. A clear picture will emerge if the current bull­ish sentiments sustain by the end of the fourth quarter of the fiscal ending March 2010 (FY 2010) and beginning of the first quarter of FY 2011.