Stocks seen hitting record high by end-June on economic optimism: Poll
The Reuters poll of more than 50 equity market strategists, brokers and fund managers taken March 20-27 found the BSE Sensex is forecast to rise to a record of 30,294 in the next three months.
India`s benchmark BSE Sensex share index will scale a new record high by mid-year, according to strategists and brokers in a Reuters poll, who have upgraded their forecasts significantly from three months ago.
This more bullish view emerges from the poll despite widespread concern since the last Reuters poll over the damage a disruptive and radical government move to replace the bulk of currency in circulation may have done to the economy.
So far there is no official evidence of such damage occurring. India`s economy had grown 7% versus a year ago last quarter, while the government`s ability to drive such sweeping change appears to have emboldened investors and traders alike.
Increased economic optimism coincides with a rush into global stock markets that is based in part on a view the world economy is in an upturn as well as hopes that the new U.S. administration will deregulate finance and cut taxes.
Indian shares have outperformed major global stock indices this year, gaining over 10%, and are forecast to rise another 3% by mid-year and a little over 6% by the end of 2017 from here.
"A stable rupee and global liquidity will give more room (for) the Indian stock market to go up," said C.A. Rudramurthy, managing director at Vachana Investments.
The Reuters poll of more than 50 equity market strategists, brokers and fund managers taken March 20-27 found the BSE Sensex is forecast to rise to a record of 30,294 in the next three months.
It is then expected to reach 31,250 by the end of this year. The index closed at 29,409.52 on Tuesday. Similar hefty gains are forecast for the broader NSE index, which is forecast to trade at 9,300 by mid-2017 and then rise to 9,525 by December 2017.
FOREIGN INFLOWS IMPORTANT
Just this month, $6.1 billion of foreign investment flowed into Indian debt and equities. Foreign investors are expected to be the biggest contributors to Indian share price movements over the next three months, according to the majority of respondents polled.
India has attracted substantial foreign investment in recent years via a relatively stable rupee as well as a government that enjoys strong support and is keen to enact reforms that attract foreign capital.
A separate Reuters poll showed that the rupee is expected to weaken slightly, trading at 68.29 per dollar in six months and 68.84 in a year compared with around 65 now.
The Nifty 50 share index hit a record high after the ruling Bharatiya Janata Party (BJP) resoundingly won an election earlier this month in Uttar Pradesh, home to 220 million people. While the Sensex is just a tad over 600 points away from its lifetime high, equity strategists are concerned about continued downgrades to corporate earnings.
Strategists were also split whether the current stock index level is expensive, fairly valued or cheap.
Twenty-four of 49 respondents said that Indian shares are currently overvalued. "(The) market is overvalued as earnings have not picked up, and after the earnings downgrade that we saw in the last quarter there has not been much improvement in the economy", said Neeraj Dewan, director at Quantum Securities.
Twenty-three poll respondents said Indian shares were fairly priced, while the remaining two said Indian shares were cheap. Despite that split, the vast majority of analysts and brokers do not expect a correction of more than 10% this year.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Retirement Planning: SIP+SWP combination; Rs 15,000 monthly SIP for 25 years and then Rs 1,52,000 monthly income for 30 years
Top Gold ETF vs Top Large Cap Mutual Fund 10-year Return Calculator: Which has given higher return on Rs 11 lakh investment; see calculations
Retirement Calculator: 40 years of age, Rs 50,000 monthly expenses; what should be retirement corpus and monthly investment
SBI 444-day FD vs Union Bank of India 333-day FD: Know maturity amount on Rs 4 lakh and Rs 8 lakh investments for general and senior citizens
EPF vs SIP vs PPF Calculator: Rs 12,000 monthly investment for 30 years; which can create highest retirement corpus
Home loan EMI vs Mutual Fund SIP Calculator: Rs 70 lakh home loan EMI for 20 years or SIP equal to EMI for 10 years; which can be easier route to buy home; know maths
02:04 PM IST