Nifty to hit 21k in next 6-9 months; 50k by 2030! Here's why ICICIDirect is bullish on Indian market

Bulls are dominating domestic equity markets, with benchmark indices scaling new highs every other day. BSE's barometer Sensex scaled 67,000-mark with new highs on Wednesday, while NSE's Nifty50 index scaled 19,800 at the open, before giving up its gains partially.

Amid the ongoing rally at Dalal Street, domestic brokerage firm ICICI Direct Research sees more legs to this rally and expects the headline index to hit the key psychological 21,000-mark in next 6-9 months, ahead of the upcoming elections. The brokerage sees strong support at 18,200 for the index.

The brokerage cites various factors, both technical and fundamentals, as its rationale for its strong targets. ICICIDirect expects historical performance, upcoming general elections, positive outlook for India and weaker US dollar to support the current breakout in the Nifty50.

Current breakout in Nifty resembles that of 2014 and 2017, wherein, index rallied 11 per cent post breakout in subsequent six months, projecting a target of 21,000 in current scenario, said ICICIDirect. Expect the rally to be non-linear with intermediate corrections of 5-7 per cent, it cautioned.

The brokerage said that all third years of the past four decades have delivered a positive median return of 18 per cent, with 2003 delivering a return of 73 per cent, while the index gained 28 per cent in 1993. However, 1983 and 2003 saw a return of 7 per cent and 9 per cent, respectively from the index. Anticipation of 18 per cent sees Nifty at 21,500 in the year 2023.

Election cycle is a major phenomenon in the equity markets. It is divided into four parts - election year, post- election year, midterm years and pre-election year, said ICICIDirect. "Indian equity markets have also highlighted certain characteristics depending upon the election cycle that is currently prevalent," it said.

Calendar year 2023 is a pre-election year that will have a significant bearing on sentiments in equity markets. It has been observed that benchmark indices have performed relatively well in the pre-election year, suggest the research from the brokerage firm.

"The index has generated positive returns in seven out of the 10 instances. Out of the three negative return instances, two were during 1995 and 1998 when there was an unstable political scenario in India while the other one was during the global financial crisis of 2008," it added.

The Indian market continues to outperform the global peers and the domestic market remains resilient within emerging markets. The brokerage expects cyclicals to remain in focus. "BFSI, a key heavyweight sector, has delivered double digit returns in three out of four election years, while auto, power, construction and infra have been in limelight on at least three occasions," ICICI said.

The brokerage continues to remain positive on the benchmark index even in the longer run and expects it to rise to the 50,000 mark by the end of the current decade or 2030. "Indian equities are likely to display the same rhythm that the US and Nikkei did in 1990-2000 and 1980-1990, respectively, that is delivering a decadal move of 5 times on headline indices," it said.

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