Sensex may scale 16k mark in 12 months

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New Delhi: The Indian stock market's benchmark index Sensex is likely to climb 14 per cent to cross the 16,000-mark in the next 12 months, riding on improving macro outlook and liquidity conditions, Japanese financial services major Nomura says.

On an overall basis, Indian stocks are fairly valued at the current levels with the relative out performance and the strong move in the market post elections now taking into account improving economic fundamentals, Nomura said in a report.

"We set a 12-month target of 16,400 for the Sensex, implying 14 per cent potential upside from current levels," Nomura research analysts Prabhat Awasthi and Nipun Prem said in th equity strategy note.

Additionally, the upcoming budget would be very important for the overall direction of the market, the report stated.

"An improvement in the macro outlook, a possible roadmap to fiscal consolidation and an extremely accommodating liquidity environment mean that risk to the downside would be limited, in our view," Awasthi and Prem said.

Further, Nomura expects consumption to remain strong with liquidity and lower rates continuing to stimulate demand for domestic cyclicals and cause a recovery in real estate with a lag.