Hang in there, but prepare for the worst

The Road's Rugged, The Destination Distant. And Be Prepared For The Worst. ET Now Panelists Help You Get A Sense Of The Journey Ahead

 THE mood was sombre with only occasional sparks of bullishness creeping through. In February 2009, the great bull run of 2004-08 is fast becoming a distant memory, though doubtless a very pleasant one. But for the masters of the Indian money market who gathered at the Rooftop, The Trident, on a Friday evening, caution was very much the theme. The scars from the unravelling of the bull market, along with a corporate governance scandal or two, had, for the time being eroded the risk-taking appetite of India's leading fund managers.
    Hope for better times, but be prepared for the worst. In all likelihood, it could be a while before the clouds of gloom over the Indian markets recede. That was the unanimous view of the power-packed panel of market gurus that participated in the discussion on 'Equity Market Outlook 2009', hosted by ET NOW, your newspaper's upcoming business channel.
    The star-studded line-up of speakers at the forum included keynote speaker Kotak Mahindra Bank vice-chairman and managing director Uday Kotak, Rare Enterprises partner Rakesh Jhunjhunwala, First Global vice-chairman and joint MD Shankar Sharma, Morgan Stanley India MD & head of research Ridham Desai, Reliance Mutual Fund Head-Equities Madhusudan Kela, ICICI Prudential AMC deputy MD and CIO Nilesh Shah, Tata AMC MD Ved Prakash Chaturvedi, Edelweiss Capital chairman & CEO Rashesh Shah and India Infoline chairman and managing director Nirmal Jain. The event was compered by Nikunj Dalmia, senior editor, ET Now.
    Stock indices are down nearly 55% from their record highs seen in January last year, but the D-Street stalwarts are not sure if the market has really seen the worst. Barring Shankar Sharma, who said the Sensex was likely to end the year with a small gain, and Madhusudan Kela, who somewhat cagily said the Sensex "could" end the year above the psychological 10,000 mark, majority of the panelists felt that 2009 was going to be a tough year as far as making money out of stocks was concerned. In fact, one should feel happy if one was able to protect his capital. The uncertain outlook was also evident from the fact that most panelists shied away from taking any sectoral bets, leave alone stock-specific bets. Still, there was consensus that gold was likely to fare better than any other asset class.
    Expect some more pain in the short-term, as the ills of the developed markets spill over to emerging economies, including India.
    "India will come out much faster than other countries, but till the disentanglement process continues, India will also feel the pain arising out of deglobalisation," said Uday Kotak, in his keynote address.
    But the million dollar question is: when is the recovery likely to happen? If the panelists are to be believed, early 2010 is perhaps the soonest one can hope to see some budding signs of stability returning to financial markets. A keenly-awaited development is the outcome of the general elections in May.
    "I think that with the macro situation improving with an oversold market, the biggest decisive factor for the markets in 2009 is going to be elections. But I am willing to bet that Mayawati is not going to be PM. Nobody is going to support Mayawati, nobody can sit with her at her feet. She tried to form a third coalition, but it broke down," said Rakesh Jhunjhunwala.
    The Oberoi Mumbai was the associate sponsor of the event while the liquor sponsor was the UB Group.

A. Balasubramanian CIO, Birla Sun Life AMC

Sandip Sabharwal of JM Financial MF with Devesh Kumar of Centrum

Devina Mehra of First Global with Sanjay Sinha of DBS Cholamandalam

Parag Parikh Chairman, PPFAS

(FROM LEFT): Ved P Chaturvedi, Nirmal Jain, Rashesh Shah, Nilesh Shah, Ridham Desai, Shankar Sharma, Madhusudan Kela, Rakesh Jhunjhunwala