ENAM - India Strategy

ENAM in their recently released India Strategy report say

Near term Macro environment remains challenging

Growth necessitates end of tightening cycle. Despite some moderation in consumption &exports, Base Case for FY08 GDP growth at ~8.6%, if RBI manages inflation despite surging liquidity

Sensex at 17x FY08E EPS of Rs 848 not so cheap. But EPS growth of 20% in FY 09 sets base for 2009+ acceleration on Secular factors

Top Absolute Buys*: ONGC, SAIL, L&T, HDFC, HLL, Sterlite, Satyam, Hindustan Zinc, Tata Motors, GAIL, PFC, Nalco, BEL, Concor, REL, Crompton Greaves

Top Absolute Sells*: Unitech, ACC, Tata Power, Titan Industries

Short term relative outperformance would be in Visibile Growth sectors ie IT & Telecom.

However, don’t over-allocate:

Telecom: Growth tapering in 2 yrs to depress PE in FY09
IT: INR to secularly appreciate, tax exemption withdrawal in FY09