Mumbai: CLSA has come out with its India Strategy for 2006. In its Strategy, CLSA is bullish on the Indian economy, but it is saying that high growth has been already factored in the valuations, which is why stocks may not reflect the momentum that has been seen in the economy.
CLSA still sees India as the fastest growing economy in the whole Asian pack. It believes that the consumption play will surprise on the positive side, in India.
But valuations are already factored in all these performances and the market should now enter a 15-18 per cent growth phase as against 24-33 per cent growth phase, which has been seen from FY03 to FY05. So in future, CLSA expects growth to be around 15-16 per cent.
More importantly, for the Sensex companies, CLSA expects earnings growth to be at around 16-17 per cent. Fund flows are expected to remain positive in 2006.
However, in 2006, one could expect to see some major IPOs. Apart from that, India might also see US monetary tightening. That may lead to some amount of volatility in the market. According to CLSA, those are two negative factors, which India needs to watch out for.
As far as model portfolio is concerned, CLSA is neutral on technology stocks. Interestingly, CLSA prefers Wipro over Infosys. CLSA believes that Wipro is under-owned as compared to Infosys.
It also says that Wipro is now settling after the management changes that were seen in the company, last year. There was a bit of a struggle for Wipro last year; but this year, Wipro could outperform, adds CLSA.
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