Stable profits from Indian stock markets in 2007: S&P

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MP Guru


Mumbai, Dec 15: Global rating agency Standard & Poor's yesterday gave a "favourable" macro-economic view for the Indian stock markets in 2007, but observed that rising input costs could hit profitability of services sector companies in the medium to long term.

In its Asia Pacific markets outlook 2007, S&P expects stable profit margins and earning per share (EPS) growth of 17 per cent on the back of strong GDP growth, stable interest rates and inflation within check.

As a potential risk, the agency feels the extended valuations and rising costs, especially for the services sector companies, could eat into profitability in the medium to long term. However, in the short-term, the low energy prices should off set the trend.

S&P expects some potential risk from government deficit, which has been so far managed by positive capital account through foreign investment inflows.

Indian rupee could come under pressure and the stock markets could witness greater selling if global investors reduce their holding in Indian equities, S&P said.

 
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