Unfazed by the stock market volatility, leading financial institution Macquarie says 2008 could still turn out to be a great year for the Indian investors, who should stay put.

“India is now too important a market to ignore and we recommend investors to stay invested in the market. We think that 2008 has the possibility of being a great year for the Indian market,” Macquarie said in its first edition of Asia Equity Guide 2008.

The Sensex has slipped 4,000 points within a gap of two months taking global cues. Rise in crude prices, a fear of recession in the US and large-scale selling by FIIs had contributed to the fall.

“We believe that India will be in a sweet spot in 2008, with strong growth accompanied by falling interest rates. India is also a strong relative play on the global growth slowdown as it is relatively more immune than most other countries in Asia and earnings’ risk are isolated to certain sectors,” it said. Moreover, India is more isolated than other Asian countries with exports only 15 per cent of Gross Domestic Product (GDP).

Macquarie said that ahead of elections, scheduled in the first quarter of 2009, some sectors could be negatively affected by ‘election inertia’, at the same time, some sectors would benefit. “We believe that careful stock selection will make India an attractive market in which to hide from the global turmoil,” the report observed.

“We think the best play on the elections is the infrastructure and capital goods space, as the Government races to finish projects ahead of the pools. Our top picks in the country are, therefore, DLF, Reliance Communications, HDFC Ltd, Tata Steel and Reliance Industries,” it said.