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23rd Anniversary Celebration

Stock Markets, 2013: What the experts foresee!

As investors look to 2013 with optimism, experts came together in the Kerala capital to offer their take on elements that can influence market behavior. Capstocks in association with the Economic Times organized the event to celebrate their 23rd anniversary.

When the US is approaching a fiscal cliff, the European Union is trying its best to wriggle out of an extended crisis, the prospects of major economies like the UK and Japan are far from rosy and a 9% growth for India looks like a distant dream, investors may fail to see any silver lining on the horizon. But 2013 indeed has opportunities for investors, as experts who converged at Trivandrum at an event organized by leading stock-broker Capstocks pointed out.

The brighter side of the Indian stock market in fact includes aspects as diverse as a dependable risk management system in place for investors, a significant growth in investment culture in smaller towns in the country, and the existence of an attractive P/E level that offers opportunities for the informed investor.

According to Ravi Varanasi, senior vice president of the National Stock Exchange, India can deservedly take pride in having one of the fastest trading systems in the world. The investors’ risks are also adequately addressed. "We have a robust risk management system, which extends right to the client level", says he.

There are other reasons why opportunities abound for the Indian investor in 2013. Abheek Barua, chief economist of the HDFC Bank, agrees that we are still in an uncertain world, given the fact that the next big risk is how the US fiscal cliff is tackled, but he expects the fiscal cliff issue to be sorted out soon. He also feels Europe is slightly better off from the situation some months back, though China may remain flat. Barua feels the India sentiment is up, particularly because inflation is one the decline.

There are risks, though in the domestic economy. For instance, land acquisition for projects continues to court controversy, raw material shortage is looming, and tariff revisions can also hurt promoters.

Technical Analyst Vijay Bhambwani would advise investors to appreciate the fact that equity, bond, forex and commodity markets move in confluence and rarely operate in isolation. "Knowledge is key in investing – it is no about running a marathon or lifting weights", says he.

Capstocks managing director Rajendran V points to the massive government expenditure on subsidies and interest as a key factor that impacts the nation’s fiscal management. "The Index of Industrial Production is near zero, inflation appears to be stubborn and there is the uncertainty in policies", says he, pointing to the reasons for the fears of the investor community.