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There will be certain other factors too that will impact the long term growth, says Gokarn. ‘‘I think the growth rate will maintain itself at above 9 per cent, given factors like demographics of the domestic market and the resource base along with the infrastructure growth.’’ he says. ‘‘If these continue, the growth momentum will stay.’’

While India is largely decoupled from the global factors when it comes to real economy, it does tend to see its markets getting impacted by global factors. ‘‘The day our valuations went higher than those of the US, we were decoupled,’’ says Kirkire. ‘‘But since there are factors of global liquidity that impact all markets simultaneously, pressures builds up in terms of volatility in the market.’’

Though in the short term there might be some pressure on the Indian economy and hence Indian stock markets that may lead to a downward revision of GDP growth rate and a flat Sensex, the long term continues to look bright.

MARKETS WILL GO FORWARD
In the short term, the market may remain volatile; in the long run, it will grow

The market tends to always discount economic factors along with any other relevant information while providing a valuation. The high valuations that the markets were trading on just a week back was a result of overenthusiasm of the investors on the future prospects of the economic growth and corporate performance. The fundamentals of the economy hold strong for now as the revenue and the profit growth for this quarter for the list of 73 companies in the BSE 200 that have disclosed their third quarter results stands at 27.7 and 45.5 per cent respectively.

However, this growth rate may not be sustainable in the short term as we move ahead in this calendar. Global events and uncertainty will take its toll on Indian markets as well. ‘‘The corporate performance might see some downward revision in 2008 which might impact the first half of 2009 largely on the back of global problems. After that, I expect the growth rate to get strong,’’ says Barua.

As far as the market performance is concerned it tends to align with corporate profitability or even at times runs ahead of it, says Kirkire. ‘‘In the long run I expect corporate profits to grow at 15-20 per cent and the market returns should be expected on the same lines,’’ he says. The current fall has raised concerns for the investors and has shaken their confidence.

In the short term, the global liquidity will define the market growth and thus is largely expected to remain volatile because of the US economy slowdown. According to Vohra, ‘‘Some correction is always healthy and India had become a tad overvalued. In the short term, the market seems to remain volatile. Corporate growth is likely to be in the range of 20-22 per cent. In the long term, we expect the stock market to grow at 20-25 per cent.’’

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