Indian markets to remain range-bound in 2011

Indian markets to remain range-bound in 2011 ; MUMBAI: The Indian stock market is expected to remain range-bound in 2011, a top broking firm official said today. "We expect Indian markets to remain range-bound in 2011. Downside is limited given the bedrock of steady earnings growth, but upside is capped given no valuation triggers," Motilal Oswal Financial Services , Joint Managing Director, Raamdeo Agrawal told reporters here.

After two-year growth holiday, India's corporate sector is expected to clock earning CAGR of 24 per cent through FY 12, he said. Rising global commodity prices led by crude, coupled with persistently high domestic inflation increase the risk of earnings downgrades going forward. Still, earnings growth will be higher than the nominal growth in GDP, implying that corporate profits to GDP would bottom out, Agrawal said.

However, market cap/GDP ratio is close to its all-time high. In parallel, domestic liquidity situation is tight and interest rates are trending higher. Market valuations do not offer any margin of safety, he said.

Commenting on the market outlook, Agrawal said the sensex earnings are in a new growth cycle, but it faces headwinds of rising commodity prices and inflation. The political and corporate governance has emerged as a whole new concern, he said. For the latest updates PRESS CTR + D or visit Stock Market news Today

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