The S&P BSE Sensex has already rallied a little over 11 percent so far in the year 2018 to touch levels closer to 38,000 but the rally may not be over yet, a poll showed.
Indian markets climbed to fresh record highs in July and momentum continued in the month of August as well, but for those who missed the rally there is good news and Sensex is on track to hit levels closer to 42,000 in the next 12 months.
The S&P BSE Sensex has already rallied a little over 11 percent so far in the year 2018 to touch levels closer to 38,000 but the rally may not be over yet and if the momentum sustains a break above 40,000 is possible by next Independence Day in 2019, a poll showed.
We spoke to 12 analysts, fund managers, and money managers over the weekend to access the momentum. Almost 67 percent of the poll respondents feel that the S&P BSE Sensex is likely to hover in a range of 40,000-42,000 in the next 12 months.
A 42,000-level on the Sensex translates into a rally of 4,000 points or by about 11 percent from the previous close of 37,869 on August 10, 2018.
However, 25 percent of the respondents feel that there is a possibility that the index could break above 42,000 while the rest 8 percent are of the view that the index could witness some profit-booking amid pre-election uncertainty and hover in the range of 38,000-40,000 by next Independence Day in 2019.
In an environment when the market is hitting record highs almost on a daily basis, investors should look for opportunities to build a long-term portfolio, suggest experts. Given the fact we are trading at record highs, some bit of consolidation cannot be ruled out.
“On this Independence Day, we’d like to suggest that investors stay independent of noise in the markets. There will always be reasons to sell, reasons to fear, but our advice is to adopt a longer-term investment horizon and buy quality companies or work with quality investment managers,” Sunil Sharma, Chief Investment Officer, Sanctum Wealth Management.
“We feel this is the most relevant advice because the most difficult task in investing is to hold on through ups and downs of markets,” he said.
For Nifty, almost 100% of the poll respondents feel that Nifty is on track to hit 12,000 and hover in the range of 12,000-13,000 in the next 12 months.
The possibility of a bog downside from current levels remains limited as there is plenty of support placed around 11,000 levels also foreign institutional investors (FIIs).
Foreign investors have pumped in over Rs 8,500 crore into the Indian capital markets in August on improvement in crude oil prices, stabilising rupee and better corporate earnings.
India seems to be the sole outperformer among the emerging markets as measured by the MSCI Emerging Market Index which is a gauge of 23 economies. MSCI Emerging Market Index appears to be positioning itself for a relief rally after taking a hit of 18% since January 2018 highs of 1278 to recent June low of 1038.
“The relentless up move on Nifty50 from the recent lows of 10,557 added almost around 1,000 points in the last 6 weeks took the indices towards long-term resistance levels placed around 11,500 from where a fresh breakout is required on long-term charts which shall further facilitate a multi-month up move,” Mazhar Mohammad of Chartviewindia.in told Moneycontrol.
“In the worst case scenario, this correction may get extended up to 11,200 kinds of levels on the downside before resuming its up move. In case of a fresh breakout above 11500 levels, the next logical targets can be projected up to 12,200 for the indices,” he said.
The rupee has been one key concern for India market which depreciated to Rs 69/USD recently. However, experts feel the currency could well top Rs 70/USD in the next 12 months easily.
As many as 50 percent of the poll respondents see rupee climbing Rs 70/USD in the next 12 months while 25 percent of them are of the view that the currency could well appreciate against the USD by next Independence Day. The rest 25 percent feel that it could hover in the range of Rs68-70/USD in the same period.
The rupee has been among the worst-performing currencies against the dollar compared with its peers so far this year and breached the 69-mark against the US dollar amid global uncertainties and concerns over inflation.
“The weakness in the rupee is expected to continue further and the domestic currency could touch 70 per US dollar if crude oil prices start moving upward again after the recent fall,” Priyank Upadhyay, AVP Commodity Research, SSJ Finance & Securities told Moneycontrol.
“Given that India is the world's third largest oil importer, any hike in global oil prices will inflate the import bill and disrupt the fiscal position,” he said.
Time to buy small & midcaps?
Small & midcaps have faced the maximum brunt of selling in the first six months of 2018 but things changed since July. Experts feel that broader market has bottomed out and there is a higher probability of recovery from current levels.
As many as 50 percent of the respondents feel that the small & midcap space has bottomed out while the remaining 33 percent feel that there could be some more pain.
Poll Respondents:DK Aggarwal, Chairman and MD, SMC Investments and Advisors Ltd
Jimeet Modi, Founder & CEO at Samco Securities.
Rahul Sharma, Senior Research Analyst at Equity99
Pritam Deuskar, Fund Manager, Bonanza Portfolio
Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory
Mustafa Nadeem, CEO, Epic Research
Manoj Sachdeva, Head Of Research, Hem Securities Ltd.
Pankaj Pandey, Head-Research, ICICIdirect.com
Vinod Nair, Head of Research at Geojit Financial Services
Soumen chatterjee, Director Guiness Securities
Shubham Agarwal, CEO & Head of Research at Quantsapp Private LimitedSSJ Finance & Securities.