Nifty to hit 9,500 by end-2015 on capital inflows: Goldman

Top US brokerage Goldman Sachs Thursday said it is bullish on India and sees Nifty hitting 9,500 -mark by end-2015 due to strong capital inflows in the country which is expected to become fastest-growing large emerging market economy in the 2016-18 period.

"We stay overweight on cyclical recovery and reform progress and expects Nifty to reach 9,500 at end-2015," Goldman Sachs Chief Asia Pacific Regional Equity Strategist Timothy Moe told reporters here.

The 50-share NSE benchmark index today ended at 8,564.

"We forecast a large balance of payments surplus in 2015 driven by a narrowing of the current account deficit and strong capital inflows. We forecast mid-teens earnings growthin 2015-16 largely driven by banks, IT and a few cyclical sectors," he said.

The Wall Street brokerage, in a report, said it expects capital inflows to increase in 2015 due to stronger FDI and resilient portfolio inflows in Asia's third largest economy.

FDI flows are to be driven by improving medium term growth prospects, removal of restrictions of flows and (investment) commitments by Japan, the US and China over the past few months. We estimate a balance of payments surplus of about USD 50 billion in 2015, it said.

"The headline CPI inflation likely to fall in 2015 to 5.8 percent from 7.3 percent in 2014, driven by lower commodity prices. This would provide some room for the RBI to cut policyrates by 50 bps in H12015," Goldman Sachs Chief India Economist Tushar Poddar said.

"We are also positive on the Indian rupee due to our expectation of a large balance of payment surplus, driven by somewhat narrower current account deficit as well as large FDI and portfolio inflows," Poddar said.

Expectation of an increase in investments in 2015 is based on easier financial conditions, government measures to remove red-tape and focus on boosting investment, he said.

The brokerage forecast the economy to expand by 6.3 percent in 2015 and 6.8 percent in 2016.

"Our forecasts imply India will become the fastest growing large emerging market economy over the 2016-18 period, overtaking China," it said.