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Last Updated : Nov 17, 2017 12:16 PM IST | Source: Moneycontrol.com

Good news! Sensex is heading towards record highs by Dec-end, above Mount 34K: Poll

The Nifty50 which lost little over 300 points from its recent high of 10,490 is all set to conquer 10,500 by the end of the year. The index lost around 3 percent in a hurry but investors have nothing to fear as the rally could stretch above 10,500 by December-end.

Kshitij Anand @kshanand

Investors who missed the rally in the last few month have nothing to worry about because the rally in Indian market is not yet over. We are heading for record highs even if US Federal Reserve raises interest rates or crude stays at elevated levels.

The S&P BSE Sensex which lost about 1,000 points from the recent top of 33,865 recorded on 7th November is all set to claim Mount 34K by December-end, according to a poll conducted by Moneycontrol. As many as 17 CIO’s, HoR, fund managers participated in the poll.

A close call but as many as 41 percent of the poll respondents feel that the S&P BSE Sensex is likely to scale above 34000 by December-end, while the rest 35 percent feel that it will stay in the range of 33000-34000.

Close

However, the rest 24 percent feel bearish about the current setup and see the index slipping below 33000 in the same period.

The Nifty50 which lost little over 300 points from its recent high of 10,490 is all set to conquer 10,500 by the end of the year. The index lost around 3 percent in a hurry but investors have nothing to fear as the rally could stretch above 10,500 by December-end.

As many as 41 percent of the poll respondents feel that Nifty is on track to scale above 10,500 by December-end, while the rest 35 percent wanted to stay conservative in their estimates and see the index trading in the range of 10,300-10,500.

About one-third or 24 percent of the respondents see a bearish set up in the next 40-45 days which could drag the index below 10,300, said the poll.

chart1

One big worry for the analyst’ community going forward is growth in earnings for India Inc. The September quarter results were largely in-line with estimates which is a good sign but December quarter results will dictate the trend for markets in the first month of 2018.

The Indian market has been moving higher largely on hope for the last 6-9 months, but now fundamentals are beginning to give away their sheen.

Earnings growth which is an important fuel for all bull markets has not bounced back which is a worry and if India Inc. fails to deliver earnings growth in the December quarter, the market could get south.

“If we look at the market in the last 6-9 months we have always been running on hope or some sort of booster shot given to the market in the form of GST implementation, or bank recapitalization,” Inderjeet Bhatia, Head of Research at Macquarie Research told CNBC-TV18 on the sidelines of its India conference.

“This kind of news flows which are positive in a structural manner for a longer term has been driving the rally upwards. But, the real essence of the market to continuously go up is earnings growth which is still missing,” he said.

“We believe what we have seen is a fairly shallow correction and if earnings fail to catch up there is more room to fall from here on,” he said.

Poll Verdict:

Two states are heading for polls and any adverse outcome for the ruling BJP could also mean some pullback for markets, fear experts.

Himachal Pradesh witnessed a record turnout. It has 68 assembly segments and currently, BJP has 29 MLAs, Congress 36 and three Independents. Now, all eyes are on Gujarat.

The Gujarat Assembly elections will be held in two phases on December 9 and 14, respectively, the Election Commission (EC) announced earlier this month. 89 Assembly constituencies will vote in phase 1, while 93 will vote in phase 2. Counting of votes will take place on December 18.

Well, most analysts’ fear that if BJP wins fewer seats in Gujarat than last time things could get shaky for D-Street. As many as 41 percent of the poll respondents feel that if the current ruling part BJP wins fewer seats than it will hurt market sentiment while 35 percent dismissed the argument. The rest 24 percent preferred not to comment.

chart2

“The outcomes of Gujarat and Himachal Pradesh elections are going to be a litmus test for the BJP govt. as there have been quite a diverged view regarding the impact of GST and Demonetization,” Dinesh Rohira, Founder & CEO, 5nance.com told Moneycontrol.

“The opposition might sway voters their way taking these are their prime talking points. The opposition seems confident of making a dent in Gujarat polls while not so much in the HP polls as there have some domestic state-level issues that the Gujarat state govt. had to grapple with,” he said.

Rohira further added that we don’t expect a sweeping win this time, but Modi will still come out as a winner in the end since there has been a general optimism with the way Govt. has been tackling issues and allowing economic growth to foster.

US Federal Reserve:

The US Federal Reserve kept interest rate unchanged when it has last met for a 2-day meet in October but opened doors for a rate hike in the month of December.

The macro data such as a pickup in inflation and gain in retail sales will give enough confidence to US Fed to raise interest rates next month. An increase in US Fed rate will be negative for emerging markets in general, and India is not an exception.

That is because a rate hike will improve the yields on US government bonds. In other words, the bonds will offer a better rate of return than before which could prompt money managers to shift funds from equities to more secure govt. bonds.

chart3

As many as 67 percent of the poll respondents feel that the US Federal Reserve will raise interest rates in the upcoming December policy meet while the rest 27 percent feel that the US Central Bank will keep status-quo this time as well.

More than the hike in interest rates, US Federal Reserve future commentary on rates will dictate the trend for the markets, especially emerging markets including that of India.

Poll Participants

Deepak Jasani, Head – Retail Research at HDFC Securities
Ajay Bodke, CEO and chief portfolio manager, Prabhudas Lilladher
Rakesh Tarway - Head of Research - Reliance Securities
Yogesh Mehta, VP- Retail Research, MOSL
Prasanth Prabhakaran, Sr. President and CEO, YES Securities (I) Ltd.
Vinod Nair, Head Of Research at Geojit Financial Services.
Jimeet Modi, Founder & CEO, Samco Securities
Arpit Jain, AVP at Arihant Capital Markets
ICICI Securities
JK Jain, head of equity research at Karvy Stock Broking
Sanjeev Jain, Associate Vice-President of Ashika Stock Broking
GEPL Capital
Centrum Capital
Dinesh Rohira, Founder & CEO, 5nance.com
Dyaneshwar Padwal – AVP – Technical Analysis, KIFS Trade Capital

Vijay Singhania, founder-director, Trade Smart Online;

Shrikant Akolkar, Sr. Equity Research Analyst, Angel Broking Pvt Ltd.

Assembly Election 2019 Results Updates:
Catch Maharashtra Election Result 2019 updates, news and views here
Catch Haryana Election Result 2019 updates, news and views here
Catch Bypoll Results 2019 updates, news and views here

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First Published on Nov 17, 2017 09:22 am
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