The Hindu Business Line : DSP Merrill bullish on Sensex

IRRESPECTIVE of which political party comes to power at the Centre after the current polls, the ongoing economic reforms were bound to continue, albeit with a variation in pace, according to DSP Merrill Lynch Fund Managers, amutual fund major with assets under management of over Rs 5,740-crore.

Allaying apprehensions that the reforms process may hit a roadblock if the Congress (I) comes to power, the DSP Merrill Lynch President, Mr Alok Vajpeyi, said, "It was Congress (I) that had initiated economic reforms in the country. At the most, there can be a change in the pace of reforms if a new party comes to power. There is enough amount of consensus among the political parties in our country on the economic reforms."

He was addressing a press conference here on Wednesday as a part of roadshows for DSP Merrill Lynch's launch of three new funds. Terming the current bloodbath on the Indian stock markets as a "temporary, exaggerated" volatility purely driven by sentiment, Mr Alok Vajpeyi said the situation may remain similar for the next couple of weeks and the market would bounce back in the next four to six months. He said DSP Merrill Lynch strongly views that the Sensex would touch the 7,000-mark by the year-end.

Following the current political uncertainty coupled with FIIs moving out from the market and panic sentiments, the Sensex might suffer a temporary fall of 10 per cent and touch the 5,200 mark in the short term, he said.

According to the DSP Merrill Lynch Senior Vice-President and Head of Equities, Mr Anup Maheshwari, "Finally, the markets will have to dance only to one tune. That is corporate results. We are of the strong view that the country would emerge as one of the strong economic and political powers in the next five to 10 years with robust growth."

The major fuelling factors of development include investments of Rs 50,000 crore on 13,000-km National Highway Development Project to be completed by next year, the Rs 1,00,000-crore investment by oil and gas sector over the next three years, and Rs 2,13,000-crore investment into power generation sector in the next three to five years.

According to Mr Maheshwari, industrial sectors such as cement, construction, engineering, metal, pipeline, power, fertiliser and petrochemicals would witness robust growth owing to the infrastructure growth and reforms. Corporates are expected to benefit directly from large-scale investments.

Stating that the country is at an inflection point now, he said "We expect substantial acceleration in infrastructure growth and economic reforms post elections. Compared with the GDP of $603-billion and market capitalisation of $257-billion now with a market cap to GDP ratio of 43 per cent, we expect the GDP to touch $1,672-billion and market cap $1,254-billion over the next decade, reflecting in a market cap to GDP ratio of 75 per cent."