Sensex seen rising 14 per cent in 2009

Sensex may not have hit a low yet but are still expected to end the year up 14 per cent.

The BSE Sensex may not have hit a low yet but are still expected to end the year up 14 per cent after losing half their value in 2008,helped by a revival in foreign fund flows and corporate earnings,a Reuters poll shows.

Uncertainty about the outcome of upcoming general elections will keep the market subdued in the near term with the main index expected to fall 1.5 per cent by mid-2009 from the end of 2008,according to the median forecast given by 19 analysts.

The deepest global financial crisis in 80 years,slowing domestic economic and corporate earnings growth and withdrawals by foreign funds have roiled Indian shares,but poll participants expect conditions to improve later this year.

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The main 30-share BSE index is seen at 9,500 points by mid-2009 and 11,000 by the end of the year,compared with the 9,647.31 it closed off in 2008,according to the poll.

The benchmark index has gained more than 18 per cent since March 9,when it posted its lowest close in more than 3 years.

In a similar poll in December,the market was seen at 10,750 points by mid-2009 and 11,000 by the end of the year.

“The majority of the bad news has already come in and people are beginning to feel probably the worst is over,” said Gajendra Nagpal,chief executive of Unicon Financial. “There will be some corrections on the way,but they won’t be very steep.”

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The Indian market fell 52 per cent in 2008,making it one of the worst performing Asian markets. It had risen 47 per cent in 2007,the final surge of a five-year bull run that saw it rise sixfold.

Nine out of 19 analysts polled felt the stock market was yet to hit its low,but the majority view was also that the market would turn up later this year on hopes of a recovery in fundamentals and overseas fund inflows.

Analysts say sluggish economic growth,a sharp decline in exports and a widening fiscal deficit are also worrying factors that could limit prospects for a stocks rally.

India’s economic growth is expected to drop below 6 per cent to a seven-year low in 2009/10 as the global crisis hits Asia’s third-largest economy harder than expected,a quarterly Reuters poll showed.

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But traders hoped lower interest rates,massive spending by the new government on sectors such as infrastructure and a possible recovery in the global financial sector could help support an economic turnaround.

Foreigners are net sellers of about $2 billion of stocks so far this year. In 2008,they had dumped over $13 billion.

India also goes to the polls in April and May,with little prospect of a single party winning a majority in a national election on its own. Traders say the possibility of a disparate coalition government was a potential risk,and could worsen an economic slowdown.