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2011: Hurdles to cross

During this decade, India’s nominal GDP nearly trebled from less than US$0.5b to US$1.3t, and per capita GDP rose 2.5x from US$427 to US$1,058.

The stock markets too responded well, delivering 18% CAGR returns, the second best performing emerging market. Market cap expanded 14x over the decade.


(1) Rise in oil prices will fuel inflation
(2) Environmental issues, resource crunch, infrastructure deficit
(3) Stressed liquidity pushing up rates.

Based on a bottom-up PAT aggregation of Sensex constituents, we arrive at FY13E Sensex EPS of Rs.1,492, up 18% YoY.

We expect 3QFY11 aggregate PAT to grow 24% YoY for MOSL Universe and 23% YoY for Sensex. Telecom and Cement the only two sectors with PAT de-growth.

We believe near-term challenges will impact performance of several sectors, particularly those dependent on domestic markets. We expect rising input costs, fuel prices and interest rates to impact discretionary consumption spends including Autos. In this backdrop, global commodities and export-oriented sectors like Technology and Pharma would continue to outperform. Our top picks are Tata Steel, Bharti Airtel, ICICI Bank, M&M and Powergrid.