With a muted stock market return, Samvat 2078 has nothing to write home about. But if one go by BT Digital Diwali survey, comprising a dozen brokerages and mutual fund houses, benchmark indices have potential to touch new highs over the next one year. The most bullish bet in the survey suggested a Nifty target of 22,918. One brokerage suggested 14,880 level as the lower-limit of its Nifty target range.
While most analysts in the survey did not offer targets of Sensex, the ones that did have a target range of 64,000-70,000 for the 30-pack index.
“Samvat 2079 now looks much brighter and more promising,” said Neeraj Chadawar, Head of Quantitative Equity Research at Axis Securities, who said the Indian economy stands in a sweet spot of growth and remains the land of stability against the backdrop of a volatile global economy.
“We believe the relative outperformance of the Indian market will likely sustain in Samvat 2079 as well and would be led by favourable macroeconomic factors and better-than-historical fundamentals of Indian corporates. We are maintaining our Mar’23 Nifty target at 18,400,” he said.
Siddarth Bhamre, Head of Research at Religare Broking expects the market to consolidate with a positive bias over the next one year. “Our Nifty target is at 19,000 and Sensex at 64,000. We believe that global economy would continue to struggle due to inflation and geopolitical issues, but during this period Indian markets may attract substantial flows as it would offer much need stability in middle of uncertainty around the globe,” he said.
On Thursday, the Nifty50 quoted at 17,500 level. Sensex was trading at 59,000 level.
Vikram Kasat, Head of Advisory at Prabhudas Lilladher has a base Nifty50 target of 20,936. In a bear case scenario, he sees Nifty50 at a 20 per cent discount to its 10-year average at 15,800. Kasat said Nifty could trade at a 10 per cent premium to its 10-year average PE of 21.5 times in a bullish case scenario. In such a case, the 50-pack index could touch 22,918, he said.
Vinod Nair, Head of Research at Geojit Financial Services finds Nifty50 at 19,000 and Sensex at 64,000 based on one-year forward PE of 18 times. The target he says provide an upside potential of 10 per cent from current levels.
Nair’s optimism on domestic stocks is based on premise that recessionary concerns will be addressed by the second half of calendar 2023 and the outlook for the world economy would improve, creating an opportunity for the resilient India to demand premium valuation.
At present, Nifty is trading at 21.4 times FY23 earnings per share (EPS) and 18.6 times on FY24 EPS basis. Kotak Securities expects the NSE benchmark to range between 14,880 (15 times FY24 EPS) and 19,530 (21 times FY24 EPS) by end of Samvat 2079.
Normalisation of discretionary services spending, easing supply chain, weakening of international commodity prices including crude and supportive fiscal policies will drive the market higher, said Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.
“Economic indicators continued to show positivity and urban demand showing reasonable strength. Rural demand is starting to see green shoots. Post a strong 40 per cent earnings growth in FY22, we expect net profits of the Nifty to grow 10 per cent in FY23E and 15.2 per cent in FY24. We estimate Nifty EPS at Rs 811 for FY23 and Rs 930 for FY24 with significant contribution from automobiles, banks, diversified financials and telecom,” Chouhan said.
HDFC Securities did not offer any target.
Sunil Nyati, Managing Director at Swastika Investmart noted that despite headwinds, Nifty and Sensex are almost flat since last Diwali. Nyati said Nifty has the potential to test the auspicious 21,000 level while the Sensex can test the 70,000 level by next Diwali, if the global market remains supportive.
“But since we are still in an uncertain global environment, conservative targets of 19,000 for Nifty and 64,000 for Sensex look reasonable,” he said.
Deepak Singh, Chief Business Officer at Reliance Securities expects Nifty50 and Sensex to reach new highs by Diwali 2023, as foreign investors continue to increase bets on India market, with the Reserve Bank of India (RBI) keeping inflation in check. Mohit Nigam, Fund Manager & Head for PMS, Hem Securities also sees good chances of the indices hitting new highs by Diwali 2023.
Sanjay Chawla, CIO for Equity at Baroda BNP Paribas Mutual Fund said he expects that Ukraine-Russia war to be over by next Diwali. He sees global inflation getting tamed the US Fed rate hike cycle getting halted.
“Given the pace of US Fed rate hikes in shorter duration of time, most global economists believe that US may go into recession. What needs to be debated if the recession is shallow or stretches to more than two quarters. Our base case assumption is a shallow recession with no major impact on Indian economy,” Chawla said.
Sumit Chanda, Founder and CEO of JARVIS Invest sees Nifty at 20,000 and Sensex at 66,000-67000. Chanda said Nifty has been able to sustain at 17,000-17,500 levels despite huge foreign outflow. “The Fed is going to continue with the rate hikes till the time the inflation is not tamed. We can expect US inflation to moderate by Q4, which is when we can expect the FPIs to start taking exposure to emerging markets again and what better an economy than ours to do that,” he said.
Stocks to track earnings
Vinit Bolinjkar, Head Of Research at Ventura Securities felt the market will remain in a consolidation phase and that any further moves from hereon will depend on how earnings pan out and also on the US rate cycle.
Chawla of Baroda BNP Paribas Mutual Fund. said India would to trade at highest premium compared to other emerging market. He expect Indian markets to deliver returns, at best, inline with the earnings growth by Diwali 2023.
