Mumbai: After a historic victory by Bharatiya Janata Party in the general elections, brokerage houses have unanimously raised their year-end targets for National Stock Exchange’s Nifty and BSE’s Sensex, as they believe that this will help the party take speedy reform decisions.
Deutsche Bank has raised its year-end target for Sensex to 28000 and strongly believes that the equity market is at the cusp of a structural bull run.
Bank of America Merrill Lynch too has increased its December-end target for Sensex to 27000 points from 25500 points. “With a strong mandate, we believe India’s growth story will remain strong, at least in the next few months,” said brokerage UBS. For the year-end, the brokerage has a target of 8000 points for Nifty.
ICICI Securities sees Nifty at 8100 points by the end of the year. “Global economic recovery, India’s GDP growth bottoming out in FY2014 and a pro-growth reformist stable central government are all structurally positive for the economy, which calls for a re-rating of Indian equities,” ICICI Securities said in a report.
Today, Nifty ended at 7263.55, up 60.55 points or 0.8% from close Friday and Sensex closed at 24363.05, up 241.31 points or 1%. Brokerage Ambit Capital sees Sensex at 30000 by the end of the current financial year, up from its previous target of 24000 points. It has also raised its gross domestic product growth estimate for 2014-15 to 5.6% from 5.1%.
With the elections now over, market participants keenly await the new government’s plan of action, and will watch for the final Union Budget.
In the final budget, analysts expect the new government to clearly articulate their economic agenda, and provide a roadmap to improve the quality of fiscal deficit by productive spending and raising sustainable revenue sources.
They also expect the government to fast track stalled projects to provide impetus to growth and employment because improving business confidence will further drive investments. “We also expect PSU Bank recapitalisation, reform of Coal India, and power distribution to be initial focus areas.
Agriculture will also see attention as only the government can bring food inflation down by raising supply,” said Credit Suisse in a report. Clearing the long pending goods and services tax, and pushing for public-private partnership projects in defence and railways are also among other things that market is looking for.