Investors on Dalal Street should keep their shopping bags ready as analysts see another 15 per cent upside in the domestic equity market by next Diwali. Market watchers believe that robust liquidity and recovery in macroeconomic trends with high-frequency indicators including GST collections and fuel demand will continue to drive market sentiment.
Brokerage YES Securities has set a target of 72,000 for the BSE Sensex and 21,000 for the NSE Nifty by next Diwali, indicating an upside of over 15 per cent from the current levels.
The 30-share Sensex has gained nearly 38 per cent since last Diwali on November 14, 2020. On the other hand, the 50-share Nifty index has advanced 40 per cent during the same period. G Chokkalingam, founder, Equinomics Research and Advisory, sees a 15 per cent kind of return from the equity market in Samvat 2078.
“Samvat 2078 is likely to start with mega IPOs from many loss-making or meagre profit-making technology companies which would partly exhaust liquidity available to the secondary markets. By the close of Samvat 2078, the US Fed also would have withdrawn almost fully asset purchases and also started hiking the benchmark interest rates. Therefore, only a nominal return of around 15 per cent is possible in the next one year.”
There are hopes that three sets of factors would be favourable to the markets in the next Samvat. Firstly, several macroeconomic parameters like business confidence, government’s tax revenues and fiscal conditions, exports, crude oil import in volume terms and monsoon. Secondly, there is a continued flood of new investors into the equity markets – in October month alone, over 35 lakh new investors registered on BSE. Nearly 3 crore new equity investors were registered in the last 12 months alone. Thirdly, around $23 trillion of stimulus packages already infused in the system would provide support to the markets.
AK Prabhakar, head of research, IDBI Capital Markets has set a target of 22,000 for Nifty. However, Vinod Nair, head of research, Geojit Financial Services, sees some correction going forward. He believes Sensex may fall to 55,500 by next Diwali, while Nifty may touch 16,500.
Analysts are positive on a couple of stocks and sectors despite the ongoing rally. While sharing his top themes, Chokkalingam said, “Businesses directly related to stock exchanges, shipping industry and public sector banks, which have relatively lower non-performing assets are expected to do very well in Samvat 2078. Massive jump in the investor base would provide solid revenue and profit growth opportunities for the stock market-related businesses.”
On the other hand, YES Securities suggested stocks like Prince Pipes, Greenpanel Industries, Apollo Pipes, Acrysil, Dalmia Bharat, PNC Infratech, Polycab, ICICI Bank, Gland Pharma and SBI Cards with an upside of up to 55 per cent.
ICICI Securities advised investors to buy stocks like Bata India, TCNS Clothing, Bank of Baroda, Gateway Distriparks and Action Construction Equipment this Diwali. The BSE and NSE will conduct the customary one-hour special Muhurat Trading, between 6:15 pm and 7:15 pm, on the auspicious occasion on November 4.
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