'Sensex may scale up to 20,000'

Saurabh Jain, head, Research (Equity), Retail, SMC Global Securities, tells Puneet Wadhwa that strong investor sentiment may push the Sensex to 20,000-plus levels by the end of the current financial year. Edited excerpts:

The markets saw range-bound trade in August. What is the outlook for the remaining FY11?

The reason for the range-bound movement was lack of clarity on the recovery process in major developed economies. In the US, the pace of output and employment continues to remain slow, indicating moderate recovery.

In Europe, too, the situation is not encouraging. China and Japan are also facing growth issues. I think liquidity will remain in the financial markets for some more time, as major economies are still resorting to expansionary monetary policies in order to stimulate economic growth. India, per se, is witnessing more promising growth.

We may soon experience good credit off-take with the start of the third quarter, as investment activity pace will accentuate after monsoon. Inflation, a major worry factor, is likely to subside, as the supply-side factors will be addressed with the good crop season.

So, all in all, I believe the sailing would be smooth in the current financial year as far as domestic growth is concerned, but worries over the global recovery may continue.

Do you think we can scale up to 20,000-plus levels by the end of the current finanacial year? What, in your opinion, will be the likely triggers?

The trigger is domestic consumption, with huge expenditure for creating infrastructure. If you notice, the discretionary sectors have performed well in the recent run-up in the markets.

With disposable income growing at a decent pace, people's urge to own a car or refrigerator has grown remarkably. Sentiments have really improved this year. Industries, consumers and even investors look more confident. So, scaling up to the 20,000-mark is quite possible.