Share market to remain robust in 2007: India Inc

New Delhi, Dec 21: A majority of Indian CEOs, merchant bankers and fund managers expect the share market to remain robust in 2007, as was in 2006.

As many as 72 per cent of the CEOs, merchant bankers and fund managers polled by a survey felt that although the market might witness gyrations of higher proportions, the underlying strength of the market plays would remain intact.

This is because economic fundamentals like GDP growth including industry production and the performance of key infrastructure sectors like manufacturing, trade and communication and financial services will continue to be better as these have accounted for the growth of more than 11.6 per cent, 13.5 per cent and 9.2 per cent in the first half of the financial year 2006-07.

Construction and electricity are likely to keep their pace in the next year as well.

Even as over 78 per cent of those polled were not sure as to where the sensex would be in 2007, they remained sure about the long-term prospects of the Indian growth story.

About 66 per cent of respondents of the Assocham Business Barometer (ABB) felt that foreign institution investors would continue to pour funds into emerging markets in 2007 with Indians staying as the top choices of the overseas portfolio managers.

They also expected mutual funds to remain as buoyant in the next calendar year as they were in 2006.

The mutual funds invested a total of Rs 15,303 crore in equity and debt during the calendar year 2006. The investment in each month increased by an average of 70 per cent during the year 2006, up 100 per cent than in 2005. The increase in the total number of mutual funds schemes during this year was 115.

The total amount invested by foreign institutional investors during the year 2006 was Rs 42,275 crore as compared to Rs 41,663 crore in year 2005, recording a marginal decline of 1.4 per cent.

The average amount invested by FIIs each month in 2006 was Rs 3,500 crore as compared to Rs 3,471 crore in 2005. The purchases by FIIs amounted to Rs 39,104.7 crore and sale was Rs 3,170.8 crore in 2006 as compared to Rs 1,75,442 crore and Rs 2,372 crore respectively in 2005.

Sensex, the 30 companies based Bombay Stock Exchange indicator, increased by 44 per cent and Nifty, 50 companies based National Stock Exchange indicator increased by 37 per cent, from January 2 to December 15, indicative of the overall robust health of the stock markets.

The Sensex closed at 9390.14 on January 2 and reached the level of 13614.52 on December 15, whereas Nifty was at 2835.95 on the first trading day of the year 2006 and closed at 3888.65 on December 15, 2006.

However a sizeable 48 per cent of ABB respondents said the economy is showing initial signs of overheating, prompting the RBI to tighten control over the monetary policy.

They said inflation would continue to stay as a trouble spot for the government as long as the supply side constraints, especially essential commodities were not removed.

The recently published World Bank Report on 'Global Economic Prospects 2007' has expected India to grow by 7.2 per cent by 2008 due to the combined effect of higher interest rates and fiscal tightening by the authorities.

The sanguine picture of India comes in tandem with the growth momentum maintained by developing economies of the nation as the report claim t hat these economies would become the main drivers of the global economy, with their share in the global output expected to rise to one-third from the present level of one-fifth by year 2005.

UNI