The Telegraph
Since 1st March, 1999
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Present perfect, future tense for stocks

New Delhi, Aug. 4: Industry believes that the sensex — the 30-scrip barometer that measures the pensive-to-euphoric mood swings of the Bombay Stock Exchange (BSE) — will hover in the range of 3000-4000 points over the next six months but opinion is sharply divided over a one-year time horizon.

A dipstick survey by the Federation of Indian Chambers of Commerce and Industry (Ficci) of industry's perceptions about the state of the capital markets shows that 70 per cent of the respondents expect the sensex to be range-bound at 3000-4000 over the next six months.

The Ficci report said, “The reason for such a view perhaps is that the general elections round the corner may create uncertainty in the Indian business environment.”

In the shorter time frame of three months, an overwhelming 94 per cent expect the sensex to see topside of 4000 and a bottom of 3000.

But it is in the longer time horizon of over a year that opinion is split down the middle with 35 per cent of the respondents saying it will range between 4000-5000 and 38 per cent saying it will remain between 3000-4000; only 15 per cent expect the sensex to top 5000 in a year’s time.

The survey, which covered about 200 companies including merchant bankers, investment bankers, asset management companies, foreign institutional investors, banks, brokerages and companies, says almost 62 per cent of the respondents felt that a relaxation of the equity market investment norms for pension and provident funds could act as a huge kicker for the stock market.

The Oasis committee on pension funds under the chairmanship of S. K. Dave had suggested allowing an investment of up to 10 per cent of accretions to pensions in equities. It is believed that easing investment norms for the two funds will deepen the market and inject liquidity.

The other big trigger for the market many (56 per cent) felt would be disinvestment of government holding in state-owned companies through public issues.

Also, 59 per cent of respondents suggested the need to introduce measures to encourage small investor participation in public issues, to provide a much-needed boost to the stock markets.

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