India stocks still look good for the long term

Indian equities have fallen sharply since mid-November and the pain will probably continue for a few more months yet. Nevertheless, we anticipate that the Reserve Bank’s monetary policy tightening will be largely over by mid-2011 and that the slowdown in GDP growth which is on the way will be mild. The Sensex index, we suspect, will be some 10-20% higher than current levels in 12 months’ time.

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