Stocks could return 15% once RBI begins to cut rate: BofA Merrill Lynch

Indian stocks could return about 15% in 2012 as the sentiment will improve once the Reserve Bank of India starts cutting rates and the government revives the economic reforms process, said Jyotivardhan Jaipuria, head of research at Bank of America Merrill Lynch. "Rate cuts will be a big silver lining; it will nudge markets up. In normal circumstances, markets gain 20-30% whenever there is a rate hike," Jaipuria said. According to Jaipuria, margin compression and slackening of demand will result in more earnings downgrades over the next few quarters. The brokerage estimates Sensex earnings-per-share to come down from Rs 1,275 to Rs 1,200 this year.

Source : Economic Times