Christopher Wood, global head of equity strategy at Jefferies, expects India’s headline stock index BSE Sensex to hit the much-anticipated 100,000 point mark in late 2026.
“The GREED & fear newsletter would like this week to signal that a target of a Sensex at 100,000 is now eminently achievable on a five-year view assuming a trend 15% EPS growth and that a five-year average multiple of 19.4 is maintained,” Wood said.
Currently, the Sensex is at 58,669 points, implying that it could rise as much as 70 percent in the next five years or in other words clock an annual rate of 11 percent.
Wood remains most inspired by the upturn in India’s housing market after seven years, which he believes will translate into a broad-based recovery in private capital expenditure “...which should be earnings positive and mean the stock market will prove to be surprisingly resilient in the face of rising interest rates.”
As per consensus estimates, the companies part of MSCI India index is expected to report more than 20 percent growth in earnings in 2022-23, which will be the third fastest in all of Asia.
That said, Wood pointed to the US Federal Reserve’s interest rate tightening cycle and surge in global crude oil prices as two major external risks. While he is not that concerned about the impact of Fed’s tightening, he said that the rise in oil prices could definitely hit the Indian economy.
“Still GREED & fear hopes that the Indian macro story will prove to be more resilient to a rising oil price than has been the case in previous cycles,” Wood added.
He noted that there is an obvious risk of further correction in the Indian stock market after recent drawdown of nearly 5 percent from the record highs in October.
“But GREED & fear remains firmly of the view that such externally driven corrections are buying opportunities because if the current housing upturn proves to be the lead indicator of a broader private sector capex cycle as was the case in 2002-03, then India should once again become one of the best performing stock markets in Asia as it was between 2003 and 2007,” Wood said.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.