Reforms to accelerate, returns to moderate in 2015 - Kotak

Reuters Market Eye - Kotak says its expects the government to accelerate reforms in 2015 with focus on land, labour and power sector.

It adds interest rates will likely decline, led by improvement in the fiscal position and lower inflation.

However, it also says returns may moderate to 15-20 pct for Sensex in 2015.

It cites expensive valuations after a large re-rating in 2014 as key reason for moderate returns.

Kotak expects 18.3 pct growth in net profit of the BSE-30 Index in FY2016.

Valuation on 12-month forward earnings -

MSCI India 17.3x

MSCI Asia-Pacific Ex Japan 12x

Source: Datastream

Sensex is up 29.1 pct YTD compared with a 2.4 pct fall in MSCI-Asia Pacific index, excluding Japan.

It adds government's minority status in the Rajya Sabha and likely funding gap as key risks.

($1 = 62.2000 rupees)

(Reporting by Abhishek Vishnoi)