IRISH companies are highly confident that they can improve sales and employment levels this year, according to the Bank of Ireland Business Confidence Index.

Eight out of every 10 of the senior executives surveyed in November expected their company's turnover to increase in the next 12 months. Seven out of 10 expected a rise in sales in the previous survey in August 1996.

The latest survey results show that companies became more optimistic about performance as 1996 progressed. In November just 15 per cent expected turnover to remain static, down from 18 per cent in August. The proportion expecting a fall in turnover was down to 6 per cent from 11 per cent in August. A sample of 178 companies were surveyed.

Two out of three of the 115 exporting companies surveyed anticipated increases in their overseas sales in the next 12 months, with 66 per cent expecting an increase compared with 59 per cent in the August survey.

In another indication of a rise in confidence only 4 per cent of the exporters expected export sales to fall, compared with 13 per cent in the August survey.

One out of every two of the 178 companies surveyed expected Irish economic growth to increase over the next 12 months while two in five, or 42 per cent, believed that it will "remain the same". Just 8 per cent expected growth to fall off, compared with 10 per cent in August.

More companies expected to raise their prices over the next year than in the August survey though the answers in this section may have been influenced by seasonal factors. Some 39 per cent of the companies surveyed in November anticipated a price increase, compared with 26 per cent in August.

Companies expecting price increases were mainly in the service, financial and distribution sectors. Some 14 per cent expected a fall in their prices compared with 17 per cent in August, with the balance expecting prices to remain steady.

Although half of the companies did not expect any increase in employment levels, the views on employment were more optimistic than in the August survey. More than one in three (36 per cent) felt that they would be in a position to take on additional employees over the next 12 months. This compared with 32 per cent in August.

At the same time, the proportion of companies which expected their workforces to fall decreased to 13 per cent from 19 per cent in August. More than three quarters of the executives surveyed (77 per cent) felt that employment prospects for a son or daughter graduating from college were better than they were a year earlier. Just one in five felt that prospects had not changed.

Bank of Ireland - commissioned the survey in association with The Irish Times. Designed to measure expectations on the Irish economy and company performance over the next 12 months among Ireland's top 1,500 companies, it was carried out by Irish Marketing Surveys in November.

The November survey collected the views and expectations of managing directors, chief executives and financial directors of a sample of 178 leading companies across all sectors. It was carried out against a favourable background of low inflation, low interest rates and strong economic forecasts.

As the stock markets start 1997 in earnest this week, all investment eyes will be focused on picking the winners for the year. Timing will be all important. It is obviously better to pick the "wrong" share at the right time than to pick the "right" share at the wrong time. The winners, in terms of percentage gains, are unlikely to be the blue chip companies; most will be predictable and produce a steady earnings stream.

There will be some exceptions, thought they will be in the minority. For the faint of heart, blue chips are relatively safe. The most spectacular gains will again be in shares of hi tech companies, but take overs and recovery stocks should also provide useful gains.

Regrettably, there is no place for hi tech companies on the Irish Stock Exchange. Instead, they will rightly follow the well trodden path to the NASDAQ in New York which has an almost insatiable appetite for such shares. This sector, predictably, is being driven by the new software companies.

CBT Systems, the Clonskeagh based designer of computer programmes which teach aspiring experts how to operate computers, has successfully tapped this market. Launched at an effective $8 in April 1995, the shares have septupled since to around $55.

Others will follow. This is the area which will continue to breed the new brand of entrepreneurial millionaires. The rapidly growing Iona Technologies might be a suitable candidate, but there are others waiting in the wings. However, investors are well aware that software technology can rapidly become obsolete and that wild gyrations in share prices also implies sharp downward movements.

Takeovers is always an area which provides much excitement as speculators are influenced more by market rumour than by facts. Although Irish companies have tended to be the predators, some will still receive bid approaches while others will merge their interests.

The most obvious mergers will, in time, involve a number of the co op controlled groups. It is a safe bet to say that by the end of this decade, and possibly much sooner, Union des Assurances de Paris will have mopped up the minority shares in New Ireland Holdings, Woodchester and Anglo Irish will be taken over, and the minority shareholding in Lyons Irish Holdings will be acquired by Unilever (Ireland). There will continue to be mergers among the exploration companies.

There are plenty of potential recovery shares. McInerney Holdings will start dealings today after a major restructuring. The share placing at 35p was recommended by this column. They should open at an acceptable premium but it will not be in a position to recommend a dividend payment until next year.

Most of the other recovery shares have been picked by financier Dermot Desmond. These comprise Jones Group, Unidare, Golden Vale and Barlo. Have they hit the bottom?

Jones is looking for some improvement in operating profit in 1996 but it could have a loss of some £1 million at the pre tax stage. Things look better for this year. The shares at 130p, the 12 month low (high 255p) have no pie for 1996 but a recovery to £1.6 million profits this year implies a prospective pie of 13.0.

Unidare has shown its unpredictability after a number of profit warnings. It was only able to maintain dividend payments last year by eating into reserves. Unidare has expressed confidence about the future but investors will need concrete proof it has turned the corner. If profits fall from £8.1 million to £5.7 million in the year to September 30th 1996, the shares at 185p (12 month high 300p, low 170p) are on a prospective pie of 9.3.

Golden Vale is in deep water with superlevy fines and changes at the top; 1996 will have been a bad year with profits falling from £16.5 million to an estimated £6.3 million. The shares at 66p (12 months high 80p low 57p) are on a questionable prospective pie of 22 but this should fall to 10 if profits double this year.

Barlo appears to have cleaned out most of the dead wood and should now be on the recovery road. Profits doubled to £2.1 million in the six months to September 30th 1996 and this trend is said to be continuing. The shares have already recovered from a low of 30p in the past 12 months, having being at 45p. If losses of £2.5 million are turned into profits of £6 million in the full year, the shares at 44p are on a prospective pie of 12.5, not too demanding a rating.

So the four appear to have bottomed out. The prospective pies seem to give a little leeway, but they will need to perform better than market expectations if they are to provide minibonanzas for investors.