S&P BSE SENSEX may reach 34500 by CY end 2015: Maximus

Target 2015 Sensex 34500, says Maximus Securities

The Sensex had an euphoric rise last year touching an all time high of 28,822 on the 28th of November 2014. resulting in a 36% return from the start of the calender year and settling down to 31% by the end of the year. The major domestic event for this rise in Sensex was the decisive mandate of the electorate in favor of the Bhartiya Janata Party in May 2014. We had a delayed monsoon but that did not lead to a price rise as the Govt. of India took decisive actions. The next big factor was the substantial fall in crude oil prices which led to the decline in CPI inflation.

The global scene witnessed the re emergence of USA as an economic power house with GDP growth of 5% in the recent quarter. The fall in global oil prices was a result of US shale production, economic slowdown in all the major regions from Europe to Japan and the decision of OPEC to hold their Oil production level. This led to a run on Russian currency – Rouble which fell from the levels of 32 to the US dollar to 68. This was on top of the economic sanctions imposed on Russia by the West for the Crimean annexation.

NSE’s Nifty ended trading at 8,282 on 31st December 2014, rising 31% from the levels of 6,301 on 31st December 2013.

BSE Sensex ended trading at 27,499 on 31st December 2014, rising 30% from the levels of 21,170 on 31st December 2013.

As per data compiled by SEBI, in CY2014, FIIs (net equity + debt) pumped in Rs 2,57,067 crores against Rs 70,649 crores in CY2013.

At the start of 2014, Rs/US$ traded at 61.18, while by the end of December 2014 it was trading at 63.38, a depreciation of 2.56% in rupee. This could have been worse but for the phenomenal rise in dollar inflows witnessed in the year.

At the beginning of 2014, Gold traded internationally at $1,200/oz, while by the end of December 2014 it was trading at $1,202/oz, a flat performance for the period.

"At the start of 2014, Brent Crude Oil traded at $110.56 per barrel, while by the end of December 2014, it was trading at $57.74 per barrel, a depreciation of -47.77%. This is a factor which helps in narrowing the current account deficit as well as keeping the inflation number in check.

Our View"We expect the FII plus FDI inflows of the order of $75 Billion in CY 2015. ($72 Bn 2014) We expect dollar index to appreciate further around 4% in CY15 ( 13% in CY14). Considering that the total forex inflow would be nearly the same level as compared to last year, we feel rupee would strengthen around 5% in CY15. Our Rupee/Dollar cross target for the year 2015 is 60.5. Gold to move in the range of $1050 - $1250/oz. Gold prices are near the bottom and are likely to remain in this range in CY15. In the longer term we do not see gold giving an attractive return. Mining and Metals market continue to slide amidst an upbeat mood in most of the markets. With a pick up in industrial growth globally we estimate a gradual improvement in this market from the second half of this year. Long term we are optimistic of a good return from this segment. Our Target for the S&P BSE SENSEX for CY end 2015 is 34,500.," says Maximus Securities research report.

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