market overview this week

Big bull Rakesh Jhunjhunwala feels the Indian stock markets, currently on an
upward rally, may "burst" in a month or two"If your see the formation of the
indexes, all the stocks are going up, indexes are going up. (There are) minor
corrections at every point. You cannot have this kind of a rise...(a) peak
without burst. I think the burst will come within one or two months," Rare
Enterprises, Partner, Rakesh Jhunjhunwala said at the Private Equity
International India Forum 2009, here today.Indian capital markets have been
heading northward led by robust liquidity positions and on the belief that
economic recovery has begun.However, Jhunjhunwala said that "I have a right
to be wrong and I may change my opinion very fast."He said that the future of Indian markets
depended on the performance of the Indian economy and the international scenario."I think
economic growth in India is going to be between 12-14 per cent over the next 5-7 years. I think
the factors that are guiding this growth are irreversible, whether it is skills, tolerance,
democracy, demographics," Jhunjhunwala said."And if growth in corporate profits is going to be
a percentage of nominal GDP growth which it is worldwide, I don't see any reason why
corporate profits should not grow between 15-17 per cent compounded," he added.
However, there is still some pain left for the western economies which have not yet witnessed
the peak of the economic slowdown."As far as the economic slowdown goes, I think we have
not (yet) seen the peak. I think the next 2-3 years for the western world are going to be far
slower than for the rest," Jhunjhunwala said. According to him, even though India places
significant importance on foreign fund inflows, the amount of local money invested in the
markets in the last five-years has been far greater than foreign money.
The Dalal Street guru said he has decided not to invest in start-up companies "because you have
to nurture them and bringing them to size is a bit of a painful process"."This year, I think Rs
2,500-3,000-crore local money will come and in two years maybe Rs 6,000 crore. I am bullish.
The flow of money is going to go through the roof," he said.The market pro said he does not
expect India to hike interest rates before March next year