Foreign banks bullish on mkts; Sensex to
touch 28K by 2014-end New Delhi, May 16 (PTI) The benchmark sensitive
indices Sensex and Nifty are expected to touch 28,000 and 8,000,
respectively by this year end as the "historic verdict" of elections
2014 will unleash a new bull run on the Dalal Street, say foreign
brokerages. Most of the global financial services majors believe that
Narendra Modi, the Prime Ministerial candidate of the BJP, is business
friendly and the Modi-led government will be ready to take tough
decisions, given the strong mandate it has received.
Experts believe that over the past decade, a fragmented coalition with differing economic ideologies had been the key reason for the economic malaise, and since this verdict has given the Modi-led BJP a clear majority, it will pave way for a more proactive government. "India has delivered one of the most decisive electoral verdicts since 1984," Deutsche Bank said in a research note, adding that "the political platform now delivered to the NDA is historic and should result in a simultaneous revival of investor, consumer and corporate confidence." With the economy and the investment cycle at the center focus of the new government, equity markets are likely to react to the verdict with euphoria, the report says.
Echoing similar sentiments, "this is a big and positive surprise for the market, in our view, and could heralds a strong and stable government."
Investors are betting on Modi-led BJP government seeing his track record in Gujarat and as his political campaign was focused more on development rather than populism.
"Given that Modi has won a strong mandate on a campaign focused around driving higher growth, markets will likely continue to believe that the policy outline will be positive. Our view is that it will be," UBS said in a research note.
"We remain bullish on Indian equities. It may be early to book profits," UBS said in a report adding that "we set our Nifty target for end-2014 at 8000."
There could be upside to this target based on how policymaking evolves over next few months, which could flow through to earnings estimates and multiples higher than average, the report added.
"We see the confidence among domestic and foreign investors returning to India & expect India to remain a very promising destination," DBS Bank Head, Treasury and Markets Vijayan S said.
The win is an opportunity to give much needed direction and decisions on the infrastructure, retail and insurance sectors to build jobs and bring fresh investments and address the more urgent issues to build confidence – like recapitalising banks in the public sectors, clarifications on some of the retrospective tax laws, Vijayan added.
The verdict is a big and positive surprise for the market, in our view, and could herald a strong and stable government, UBS said in India markets strategy report here.
"We remain bullish on Indian equities as markets may continue to trade above fair value. Markets have moved up sharply over the past few months, but is still trading at 15.2x one-year forward PE, very close to its 5-year mean.
"We have talked about Nifty fair value of 6900 based on 15x PE and 15 per cent earnings growth expectation in FY15 and Nifty touching 7,800 at 15 per cent earnings growth for FY15. We believe investors will be willing to give a premium for growth hope and also look beyond FY15 earnings estimates," the report said.
By end of 2014, investors would start looking at FY16 estimates. Based on our top-down expectation of 15 per cent earnings growth in FY16, and 15x PE, we set our Nifty target for end-2014 at 8000, UBS said. There may be upside to this target based on how policy-making evolves over next few months, which could flow through to earnings estimates and multiples higher than average. On the other hand, a big part of the index does not benefit from the possible economic recovery in IT and pharma or less in staples and global commodities. "We think sector rotation towards domestic cyclicals should be a strategy investors should continue to pursue, as positioning also remains supportive," it said. UBS said it remained bullish on India and it may be early to book profits.
Experts believe that over the past decade, a fragmented coalition with differing economic ideologies had been the key reason for the economic malaise, and since this verdict has given the Modi-led BJP a clear majority, it will pave way for a more proactive government. "India has delivered one of the most decisive electoral verdicts since 1984," Deutsche Bank said in a research note, adding that "the political platform now delivered to the NDA is historic and should result in a simultaneous revival of investor, consumer and corporate confidence." With the economy and the investment cycle at the center focus of the new government, equity markets are likely to react to the verdict with euphoria, the report says.
Echoing similar sentiments, "this is a big and positive surprise for the market, in our view, and could heralds a strong and stable government."
Investors are betting on Modi-led BJP government seeing his track record in Gujarat and as his political campaign was focused more on development rather than populism.
"Given that Modi has won a strong mandate on a campaign focused around driving higher growth, markets will likely continue to believe that the policy outline will be positive. Our view is that it will be," UBS said in a research note.
"We remain bullish on Indian equities. It may be early to book profits," UBS said in a report adding that "we set our Nifty target for end-2014 at 8000."
There could be upside to this target based on how policymaking evolves over next few months, which could flow through to earnings estimates and multiples higher than average, the report added.
"We see the confidence among domestic and foreign investors returning to India & expect India to remain a very promising destination," DBS Bank Head, Treasury and Markets Vijayan S said.
The win is an opportunity to give much needed direction and decisions on the infrastructure, retail and insurance sectors to build jobs and bring fresh investments and address the more urgent issues to build confidence – like recapitalising banks in the public sectors, clarifications on some of the retrospective tax laws, Vijayan added.
UBS sets Nifty 2014 target at 8,000
Swiss brokerage firm UBS Securities today said it has set its Nifty target at 8,000 points mark for end-2014, following clear majority to Modi-led BJP government.The verdict is a big and positive surprise for the market, in our view, and could herald a strong and stable government, UBS said in India markets strategy report here.
"We remain bullish on Indian equities as markets may continue to trade above fair value. Markets have moved up sharply over the past few months, but is still trading at 15.2x one-year forward PE, very close to its 5-year mean.
"We have talked about Nifty fair value of 6900 based on 15x PE and 15 per cent earnings growth expectation in FY15 and Nifty touching 7,800 at 15 per cent earnings growth for FY15. We believe investors will be willing to give a premium for growth hope and also look beyond FY15 earnings estimates," the report said.
By end of 2014, investors would start looking at FY16 estimates. Based on our top-down expectation of 15 per cent earnings growth in FY16, and 15x PE, we set our Nifty target for end-2014 at 8000, UBS said. There may be upside to this target based on how policy-making evolves over next few months, which could flow through to earnings estimates and multiples higher than average. On the other hand, a big part of the index does not benefit from the possible economic recovery in IT and pharma or less in staples and global commodities. "We think sector rotation towards domestic cyclicals should be a strategy investors should continue to pursue, as positioning also remains supportive," it said. UBS said it remained bullish on India and it may be early to book profits.
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