Consensus estimates on the 30 index constituents indicate that the index may add another 10% in next one year and hit 22,803 levels. This expectation appears modest compared with 13% to 17% rise predicted by some of the foreign brokerages in 2014. The Sensex closed at 20,715.58 on Friday.
Both Goldman and Macquarie have based their outlook on the broader 50-share Nifty, which they see at 6,900 and 7,200 points, respectively, by the end of 2013. The projected levels indicate an upside of 17% and 12%, in that order. Post the recent state election results, both the brokers are optimistic that a Narendra Modi-led BJP is likely to come to power after the Lok Sabha election in 2014.
BofAML pegged its 2014 Sensex target at 23,500 based on expectations of a valuation of 15 times one-year forward earnings.
According to Bloomberg consensus estimates, analysts appear most upbeat on Bharti, Cipla, NTPC and ONGC among the Sensex constituents, as they expect a more than 20% upside for these stocks over the next 12-months.
Bharti leads the bluechips in terms of expected returns, with analysts predicting a 26% upside to the stock over the period with a target price of R405.63.
Analysts are also optimistic on pharmaceutical companies which benefit from a weaker rupee along with being considered defensive stocks. Amongst the pharma stocks included in the Sensex, Cipla, Sun Pharma and Dr Reddys are expected to gain 21%, 17% and 15% in 2014 as per consensus outlook.
Although FMCG giant ITC is also among the preferred stocks with an 18% predicted gain, analysts appear cautious on Hindustan Unilever (HUL).
BHEL, Hindalco, Tata Steel and L&T are among the expected weak performers with a 15% to 2% decline expected.