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    Sensex hits fresh record highs: The road ahead for markets

    Synopsis

    Analysts say that the momentum is fairly strong in the markets and small corrections, which may happen, should be used to enter markets or build positions.

    ET Online
    NEW DELHI: After moving in a narrow range for most part of the trading session, the Sensex picked up momentum in the last one hour of trade and rallied as much as 146 points to hit its fresh record high of 26,292.66 in trade on Thursday.

    The S&B BSE Sensex finally closed 137.02 points higher at 26,271.85. It hit a low of 26,077.70 and a lifetime high of 26,292.66 in trade today.

    Tracking the momentum, the 50-share Nifty index also managed to hit fresh lifetime high of 7,835.65 in trade today. The index finally closed 34.85 points higher at 7,830.60.

    The S&P BSE Sensex has already rallied over 24 per cent so far in the year 2014 and has become the top performing index in the world on a year-to-date basis.

    According to analysts, the momentum is fairly strong in the markets and small corrections, which may happen, should be used to enter the markets or build positions.

    “Structurally, India is on a very different growth path than it was a year ago. That should support Indian equities compared to the rest of the world,” said Binay Chandgothia, Portfolio Manager at Principal Global Investors.

    “According to our PGI’s demographic model, India is among the top three nations in the world, which means that if you get the right policy mix in India, the growth potential for India should be much higher than in many other countries,” he said, adding that “I would not be surprised if India continues to do well over the next three to five years.”

    Most market experts are of the view that foreign investors have been betting big on the Indian market mainly on reform agenda of the new government at the Centre.

    “Most foreign investors are ‘overweight’ on India and our sense is that they are not fully positioned for an economic upturn,” BofA-ML said in a report. They spoke to nearly 60 global investors over the past two weeks, and each was overweight on India.

    “We have been highlighting since the late last year that the earnings downgrade phase is behind us and the upgrade phase should start from mid-2015,” added the global investment bank which has a year-end target for the Sensex at 27,000.

    The net investment by foreign investors in equity market stood at Rs 10,755 crore ($1.8 billion) till July 19, while for the debt market it was at Rs 11,268 crore ($1.89 billion), taking the total amount to Rs 22,023 crore ($3.67 billion), according to the latest data.

    We have collated views & recommendations from various analysts on markets as well stocks and sectors from the near to medium-term perspective:

    Dilip Bhat, Joint MD of Prabhudas Lilladher

    The markets have seen only a very shallow correction. The fundamental assumption is that in the next two to three years or maybe longer, we are going to see a broader trend which is going to go northwards - whether it is economy, earnings, etc.

    Markets are probably still factoring that in and as we have seen, in every dip in the market, there is a good amount of buying that takes place.
     
    Binay Chandgothia, Portfolio Manager at Principal Global Investors

    The Nifty has legs to rally beyond 7800. It depends on how the earnings season plays out, in terms of what comes out in the form of additional policy prescription from the government.

    Ultimately, it is about a surge for markets where you can get good structural growth. There is tremendous global liquidity. The monetary conditions in the world are still very easy. Therefore, you will see investors getting to markets where they get a sense of good fundamental growth for the next three to five years.

    It is possible that given the short term rally in India since the beginning of the year, the markets might correct for the next two or three months. But the trend is upwards.

    Mahesh Patil, Co-Chief Investment Officer at Birla Sunlife MF

    The market is trending higher and things are looking better. The inflation data that has come in was positive. So there is a sense that interest rates could be cut than what was expected earlier. There has been a pick-up in some IIP numbers also.

    Thus, overall there is a sense that even if not this year, but you should see a decent recovery back in the economy FY16 onwards, despite the near-term concerns about poor monsoons. Fortunately, the monsoons have also advanced well.

    Going by the return the market has given, it is time for some kind of consolidation. Even in terms of stocks, we have seen a lot of stocks - especially in the small and midcap sector - which have outperformed. If the earnings growth does not follow through in the next few quarters, it will be difficult for the stocks in the market to rise significantly from these levels.

    Nilesh Sathe, Director & Chief Executive Officer, LIC Nomura MF

    The Sensex has seen an all-time high today, and the Nifty has also crossed 7800 mark. Going forward, it should be seen as to how the government actually implements some of the steps which they have announced and how the monsoon also behaves.

    Similarly, there is one more trigger which may impact the market and that is the international scenario which we are seeing in Israel and Hamas or the Russian conflict, etc. On that level also, if something serious happens, then probably in the short run, the Sensex may not peak further. But by and large, the indications are quite positive.

    Deutsche Bank

    We continue to reiterate our overweight on domestic cyclical. With slowdown in decision making (on account of coalition constraints) having been the key worry for investors, the demonstration of faster and more transparent approval processes should result in hastening the cyclical turnaround.

    We are overweight on stocks such as L&T, Siemens, Thermax, UltraTech, Powergrid, Axis Bank and ICICI Bank.

    (The views and recommendations expressed in this section are the analysts’ own and do not represent those of EconomicTimes.com. Please consult your financial advisor before taking any position in the stocks mentioned.)



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    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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