impact US credit rating downgrade on Indian stock market

Indonesia stock info- impact US credit rating downgrade on Indian stock market ; The Indian stock market is likely to feel the pressure of US credit rating downgrade only for the next few days, but situation will look up for the domestic market in 3-4 months as interest rates would peak and price pressures ease

IMPACT OF US DOWNGRADE
India is likely to witness volatility over the next few days and the market may trade lower. However, the impact of US credit rating downgrade on the Indian market will not prolong beyond a day or two. At worse, we expect a 5-7% downward impact on the domestic market.

OUTLOOK FOR INDIA
At this juncture, India will outperform on downside. Making absolute money on upside could happen after 3-4 months. I am not sure about the next 15-30 days. I expect next year to be very good, as rates will peak and inflation will ease. Next year, there may be even 20-25% returns.

SECTOR PICKS
We like financials and infrastructure, which we consider as one theme. Second, we like consumer and our third pick would be technology.

ON DEFENSIVES
Valuations in defensive stocks are too high and they are not defensive any longer. You can't have a 40 P/E company not falling. It may not decline more than others, but it will fall anyways.

ON INFRASTRUCTURE
Infrastructure stocks are waiting for interest rates to peak. After that, you can start buying. But they will do well in the next twoyear horizon.

ON INFORMATION TECHNOLOGY
We like large-caps over small-caps, because IT is one sector where historically large-caps have broadly delivered and there is no need to look for mid-caps. It would be too easy to say that Infosys doesn't know how to react to the world and TCS does. We own both stocks equally. We think that Infosys should also do well if the IT industry is doing well in 9-12 months.

INDIA 2012 OUTLOOK
We have pushed interest rate hikes beyond limits and there is no chance now of another rate increase. But in case there is more rise in policy rate, it will signal that the end is near. Also, more actions are expected from the government on the policy front. So, by 2012, India would look better.

Related Post:

Indian Stocks

• BSE Sensex, ICICI Bank shares, ITC down oct 23 2012
• Indian stock market forecast next week october 22-26 2012
• NCD issue option from Shriram City Union Finance
• NCD issue next week september 10 2012
• Indian stock market, Nifty outlook 10-14 2012
• BUY OR SELL Indian stock april 19 2012
• Nifty India stock futures feb 9 2012
• Indian markets Nifty down january 30 2012
• Reliance Industries (RIL) stock prices down january 23 2012
• indian stock Markets forecast january 23-27 2012