The foreign institutional investors (FIIs) are increasingly becoming nervous about investing in emerging markets, as they have already pulled out funds worth $ 5 billion in last 5 months. Narrow the time to one week and it appears, some big selling has come through with India losing out the maximum among Asian emerging markets except for China. This short term liquidity squeeze has led many leading foreign brokerage houses to rework their Sensex targets.The global financial services firm UBS views Sensex may test 14,000 in near term while another financial services firm Credit Suisse says Sensex may test 13,000 by 2008 end.
But the ticker on valuations shows that India is still expensive. The current price-earnings multiple of the BSE Sensex is at 17 times against 12 to 15 times in economies like South Korea, Russia, South Africa and Brazil. Analysts say markets are likely to remain shaky in coming weeks as markets will be eyeing some crucial US economic numbers like CPI, retail and home sales data. And European cues will also be uncertain thanks to a crisis of confidence in the banking system. So, in this situation all eyes will be on global equity markets since that is where the cues for India will come from in the next few days.
But the ticker on valuations shows that India is still expensive. The current price-earnings multiple of the BSE Sensex is at 17 times against 12 to 15 times in economies like South Korea, Russia, South Africa and Brazil. Analysts say markets are likely to remain shaky in coming weeks as markets will be eyeing some crucial US economic numbers like CPI, retail and home sales data. And European cues will also be uncertain thanks to a crisis of confidence in the banking system. So, in this situation all eyes will be on global equity markets since that is where the cues for India will come from in the next few days.
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