Researchers and Analysts believe that the year 2016 would be a good year for Investors
Predictions on the Dalal Street are soaring high, nothing unusual, as it is the equity research analysts who work with complex statistics, and interpret it in a relevant manner. They have been meaning to appeal to investors, to take it to the next level, at the onset of a new year.
The blockbuster year 2014, in which the Indian markets spiked to 30%, has raised the bar up for everyone with the brokerage predicting excess return in the year 2015.
The analysis by major brokerage firms was mostly dependent on the government rolling out crucial reforms, policies which would aid the economic growth. A lot of researchers and trading firms stated the return on capital to be somewhere around 15-20% but at the year-end it has indeed plunged to 6%.
Earlier expectations of Sensex closing at 33000 at the year-end were established by Global brokerage firms, assuming big gains in the market. Investing majors such as Citibank along with HSBC, UBS had previously revised their targets citing dependencies on low inflation, high valuations and expectations from the government. While the revised targets were set close to 32000, which at the year-end closing, stands at 26117.
A statement from one of the leading financial services company, indicated 2016, as a positive year ahead for investors as 2015 turned out to be a down year. A similar market prediction has been made boasting of 15-20% return in the coming year, wherein the other experts project the economy to grow at a decent 8%.
In the Initial Public Offering (IPO), Investment Bankers have forecasted a raise of $5 billion in 2016. India's listed large and mid-cap companies are expected to post an average net income growth of 21.6 percent in the next fiscal year beginning in April, up from 9.2 percent in this fiscal, as per Thomson Reuters Starmine data.
Even though the benchmark equity index may recuperate from the losses and set a new record for the coming year depending upon low commodity prices, government reforms, low inflation and improving macro environment.
The focus, according to experts should be on individual stocks rather than benchmarks. A mix of large cap and midcap stocks can give good amount of returns based on the reports. However, analysts emphasise on picking the right stocks in a particular sector, focusing more on quality of management, growth rate, balance sheets and return ratios.