points by end-2008, as the Reserve Bank of India may raise interest
rates to check inflation due to record oil prices, Credit Suisse said
on Monday.
"The market is still not pricing in the much lower earnings growth
being forecast by corporates and banks," Nilesh Jasani, head of
research at the Indian unit of the Swiss bank told reporters at a
briefing.
Indian stocks fell as much as 2.5 percent on Monday on top of a 5.1
percent decline last week and has shaved off a quarter of its value so
far in 2008 as foreigners sold $4.8 billion worth of stocks amid
concerns of rising inflation and slowing growth.
They bought $17.4 billion of stocks in 2007, pushing up the main index
by 47 percent. It was at 15,191 points on Monday.
Uncertainty ahead of national elections will also weigh on the minds
of investors, Jasani said.
While the government expects the economy to grow by around 8.5 percent
in 2007/08, many research houses expect Asia's third-biggest economy
to expand at less than 8 percent as the impact of previous policy
tightening starts to show.
Jasani expects the rupee to remain weak in the current year, pressured
by a widening current account deficit and expects inflation at 9-9.5
percent by September.
The Indian rupee has fallen more than 8 percent in this year, hitting
a 13-month low of 43.21 last month, forcing policymakers to ease
offshore borrowing regulations for local firms and the RBI to
intervene in the currency market.
"Every 1 percent depreciation in the rupee accounts for a 15 percent
rise in the deficit bill, so we assume the government will want the
currency to stop depreciating some time
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