Sensex to hit 24,500 by the end of 2014 - Reuters poll

BANGALORE Thu Mar 20, 2014 5:10pm IST

A man walks past the Bombay Stock Exchange (BSE) building in Mumbai December 5, 2013. REUTERS/Danish Siddiqui/Files

A man walks past the Bombay Stock Exchange (BSE) building in Mumbai December 5, 2013.

Credit: Reuters/Danish Siddiqui/Files

Related Topics

BANGALORE (Reuters) - The BSE Sensex is forecast to continue setting new record highs this year as foreign capital is lured into the market, especially if general elections return the business-friendly opposition Bharatiya Janata Party (BJP) to power, a Reuters poll found on Thursday.

The BSE Sensex hit a life-time high of 22,040.72 on Tuesday but the poll of 23 equity analysts, taken in the past week, forecast the index to rise further to 23,000 by the end of June.

It is then expected to hit 24,500 by the end of 2014, a 12 percent gain from Wednesday's close of 21,832.86.

India's top share index has risen 3 percent this year, with foreign investors pouring in nearly $2 billion after ploughing in more than $18 billion last year.

Analysts expect overseas investors to continue buying Indian shares in the run-up to the world's largest democracy going to the polls in April and May.

"The market will keep going up until the (election) results are announced and the euphoria will last for a month or two after, until the budget is announced where people expect big bang reforms," said Madan Sabnavis, chief economist at CARE Ratings in Mumbai.

All but one of the 19 strategists polled expected the Sensex to rally in anticipation of reforms and draw further overseas funds if, as is widely expected, the opposition BJP wins the election.

However, 13 of the 19 strategists expect the index to change little or fall if the ruling Congress Party gains a majority. Only 6 said the index will rise in such a scenario.

"Since the market is fairly valued, a badly fractured election verdict will result in a sell off and a market crash," said V.K. Vijayakumar, investment strategist at Geojit BNP Paribas, adding that a coalition led by the BJP would likely extend the recent rally.

The current Congress-led coalition has been widely criticised for its inaction in pushing through key reforms, which has hurt economic growth and investor sentiment.

Analysts also attributed the expected rally in Indian stocks to a slight improvement in the outlook for inflation and fiscal balances.

On Tuesday, Goldman Sachs upgraded its rating on Indian shares to "overweight" from "marketweight" as external vulnerabilities have reduced and noted a potential for further gains ahead of elections.

Most emerging market stocks took a hit in May when the United States Federal Reserve first hinted at tapering its monthly bond purchases but have consolidated since then, despite the Fed rolling back its stimulus from January.

"We believe emerging markets look attractive as compared to developed markets in terms of valuations," said Deven Choksey, chief executive of broking firm K.R. Choksey in Mumbai.

"Within emerging markets, countries which are reliant on exports to the U.S. look very attractive considering the improvement in U.S. macro data."

(Polling by Shaloo Shrivastava, analysis by Hari Kishan and Swati Chaturvedi; Editing by Shri Navaratnam)

FILED UNDER:

Economic Pulse

REUTERS SHOWCASE

Banking Sector

Banking Sector

India's laggard state lenders face tough sell on capital raising plan  Full Article 

Falling Oil Prices

Falling Oil Prices

Saudis signal no push for oil cut as market to "stabilise itself"  Full Article 

Raising Stake

Raising Stake

Nippon Life to raise stake in Reliance Capital fund unit  Full Article 

Sterilisation Camps

Sterilisation Camps

Sterilisation targets remain in all but name, critics say  Full Article 

Share Buyback

Share Buyback

Samsung Electronics to buy back $2 billion in shares  Full Article 

Bird Flu Scare

Bird Flu Scare

India orders culling after bird flu outbreaks in Kerala.  Full Article 

Microsoft in China

Microsoft in China

Microsoft to pay China $140 million for 'tax evasion'   Full Article 

Flashback: 26/11

Flashback: 26/11

The three-day attack in November 2008 left 166 dead.  Slideshow 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage