Outlook On The Equity Markets

• Strong GDP growth
• Agriculture can provide additional kicker
• Services leading to employment opportunities
• Demographics in India’s favour
• Infrastructure spending and CAPEX- Multiplier effect
• Global advantage spreading to other sectors
• Strong Corporate Performance
• Valuations relative to growth reasonable
• Flows, domestic and global, expected to remain strong

• GDP growth rate for FY07 expected to be 7%
• India’s GDP growth rate to cross China’s by 2010 (BRICs)
• It took 57 years for India’s GDP to touch $700 Billion
• It will take only 6 more years for India’s GDP to double to $1400 Billion
• Growth in agriculture can result in GDP growing at a much faster pace
• Very few countries that can match India’s growth rate

• Complete restructuring expected in the next few years
• Corporate Involvement Increasing
  • Bharti & Reliance- Contract farming initiative
  • Setting up of food retail chains
  • Setting up cold chains
• Technology
  • Commodity exchanges
  • Initiatives like ITC e-choupal
  • Government focus on agri economy

• 56% of India’s GDP contributed by Services sector as against 48% five years back
• Services like Finance, BPO, Retail etc creating huge employment opportunities for India’s growing youth population
• Services sector will continue to be a big job creator
• Rising income levels among youth fueling consumption and demand

Infrastructure & CAPEX Spending

• Total spend will increase from $120 Billion in 2004 to $208 Bililion by FY07
• All major sectors seeing capacity additions
• Equity & attractive debt making projects more viable
• Multiplier effect will fuel demand

India Gaining Global Advantage In Other Sectors

• Technology & BPO led the outsourcing wave
• Pharma & Research enhanced India’s technological competence
• Opportunities spreading to Engineering, Auto etc.

• Profit growth remains healthy
• Huge infrastructure spending, higher income levels and buoyant economy will lead to strong domestic demand
• outsourcing opportunities will result in faster economic growth
• Attractive global acquisitions provide upside earning potential
• Net profits for Nifty stocks have risen approximately from Rs. 17,000 Crores to Rs. 78, 000 Crores in five years
• Assuming a 15% CAGR over the coming five years, NIFTY profits will be Rs. 155, 000 Crores in FY2010
• Assuming a 20% earnings CAGR over the coming five years, NIFTY profits will be Rs. 195, 000 Crores in FY2010

Markets At A New Peak, However Valuations Still At Comfortable Levels

• India on a growth path
• Reasonable Valuations
• Reform process on track, albeit slowly
• Currently 834 FII’s are registered in India as against 502 FII’s three years ago
• India accounts for 27% of total emerging market FII flows

FII Exposure In Emerging Markets

• Stock specific opportunities exist in all forms of markets
• A stock specific strategy needs to be followed rather than a broad market call