A majority of India’s stock fund managers see at least a 5 percent rise in the benchmark BSE index in the next three months and may invest mainly in shares in engineering and financial sectors, a Reuters poll showed.

Three-fourth of the respondents in Reuters Asset Allocation Poll conducted from March 17-25 said the index, down 21 percent this year, will have positive return in the next three months. A fourth said it will rise more than 10 percent.

“Expectation of better result and valuations being closer to the long-term PE band of 15 makes Indian market one of the most attractive Markets in the emerging world,” R. Rajagopal, chief investment officer of DBS Cholamandalam Asset Management, said.

The fourth quarter results will show earnings expectation of the firms and bring clarity to the Markets, she added.

The benchmark BSE index traded at one year forward price to earnings (PE) ratio of above 21 in early January but a sharp fall since then has softened the valuations, with the PE ratio falling to nearly 15 last week. This has made fund managers look to deploy cash back into the stock market mainly in relatively liquid large-caps.

Over 87 percent of the respondents said they would mainly go for large-cap stocks. More than a third said they would cut exposure to mid- and small-cap shares in the next three month.

Ref: Financial Express