Moneycontrol Bureau
Brokerage house Nomura sees the Sensex hitting 33,500 by end of December because of the simultaneous improvement in both the interest rate cycle as well as the growth cycle.
“Our bullish stance on the Indian market for this year is based on our high conviction view that the improvement in India’s macro environment over the past year is durable and will improve further,” Nomura India MD & Head of Equity Prabhat Awasthi wrote in a strategy note to clients.
“The lagged effect of the much needed complete overhaul of the political economy is a significant tailwind. The extent to which this is not yet priced in will provide upside to multiples, thus adding to market returns over and above earnings growth,” the note said.
Five reasons for Nomura’s bullish view on India:
(Excerpts from the note)
1. Falling cost of capital2. Improvement in growth, both cyclical and structural3. A positive terms-of-trade shock that will reduce the savings -investment gap and improve the market’s macro ecosystem significantly. 4. A right-of-centre governance philosophy backed by strong execution5. Support from rising profitability on increasing asset utilisations, and rising margins on lower raw material and interest costs.
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