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Jefferies' Chris Wood sees Sensex at 1,00,000 in FY27; here's why

Jefferies' Chris Wood sees Sensex at 1,00,000 in FY27; here's why

Jefferies’ Christopher Wood believes that the benchmark equity index BSE Sensex may hit 1,00,000-mark in the next five years, assuming a 15 per cent EPS growth and a five-year average multiple of 19.4.

The market veteran further added that greed and fear will maintain the domestic demand focus in the long-only Indian portfolio which is geared into the housing cycle with a 17 per cent weightage in real estate stocks. The market veteran further added that greed and fear will maintain the domestic demand focus in the long-only Indian portfolio which is geared into the housing cycle with a 17 per cent weightage in real estate stocks.

Jefferies’ Christopher Wood believes that the benchmark equity index BSE Sensex may hit 1,00,000-mark in the next five years, assuming a 15 per cent EPS growth and a five-year average multiple of 19.4.

In his report, Greed & Fear, he added that the 30-share index will hit the target during FY27 or sometime in late 2026. His projection indicates an upside of 70 per cent from the current level of around 58,700.

“India has always been a stock market for growth investors with the multiple to go with it. In a G7 world where value investors may finally enjoy an extended period of outperformance over growth, until at least the Fed performs another U-turn, India should be a prime object of focus for growth-oriented equity investors, be they Asian and emerging market investors or global investors,” said the global head of equity strategy at Jefferies.

The market veteran further added that greed and fear will maintain the domestic demand focus in the long-only Indian portfolio which is geared into the housing cycle with a 17 per cent weightage in real estate stocks.

From a macro perspective, he is encouraged by an upturn in the country’s housing cycle which commenced after a seven-year downturn. “This should translate into a broader capex cycle which should be earnings positive and mean the stock market will prove to be surprisingly resilient in the face of rising interest rates,” Wood said.

The report showed that money markets expect about around two-three 25 basis points rate hikes this year in India. On the housing cycle, Jefferies’ has recently noted that the surge in stamp duties on a country-wide level, up 59 per cent YoY in April-November, is a strong indicator of the improvement in the broader housing or property cycle.

He also said that the accelerating growth story is reflected in the rising earnings forecast. India looks set to record perhaps the best earnings growth in Asia this year with only Indonesia and the Philippines higher in terms of consensus forecasts. “The consensus earnings growth forecast for the MSCI India this year is 20.3 per cent, compared with 11.3 per cent for the Asia ex-Japan region,” he said, adding Fed tightening cycle and a further spike in crude oil prices are key external risks for the Indian equity market.

Published on: Feb 04, 2022, 4:40 PM IST
Posted by: Vivek Dubey, Feb 04, 2022, 4:37 PM IST