After post-Budget bull run, Kotak Securities revises up year-end Sensex target

By: |
February 2, 2021 6:30 PM

The domestic brokerage now expects the BSE's 30-share benchmark Sensex to be at 51,000 points by the end of 2021, as against its projection of 46,000 made in December 2020. Similarly, it expects the NSE's benchmark Nifty to be at 15,000 points as against 13,500 earlier.

Strong global markets also helped the rally, with bourses in the UK, Germany, and France rising between 0.03% and 0.27%. The Asian markets in Taiwan, Hong Kong, and South Korea closed the session higher by 0.07% to 1.06%.Strong global markets also helped the rally, with bourses in the UK, Germany, and France rising between 0.03% and 0.27%. The Asian markets in Taiwan, Hong Kong, and South Korea closed the session higher by 0.07% to 1.06%.

Handsome gains in equities over the last two sessions, coupled with strong company financials in the December quarter, made Kotak Securities on Tuesday upwardly revise its year-end target for the domestic market indices.

The domestic brokerage now expects the BSE’s 30-share benchmark Sensex to be at 51,000 points by the end of 2021, as against its projection of 46,000 made in December 2020. Similarly, it expects the NSE’s benchmark Nifty to be at 15,000 points as against 13,500 earlier.

The BSE’s benchmark gained 2.46 per cent to close at 49,797 points on Tuesday as the pos-Budget rally continued for the second session.

However, over the past few months concerns have been raised about a disconnect between the markets and the real economy, including by RBI Governor Shaktikanta Das, who also flagged it as a potential risk for financial stability.

After shedding nearly 40 per cent in the initial days of the pandemic in March 2020, there has been over 80 per cent jump in the indices in an ongoing bull run.

“Post yesterday’s budget, looking at Q3FY21 numbers that are coming and the very low base of the first half of FY20 we feel there could be more earnings upgrades possible in the next few months,” Kotak Securities’ Executive Vice President Rusmik Oza said in a statement.

He said the revised target is 6 per cent higher as compared to the one given in December 2020.
Oza said the brokerage’s earlier target had an earnings per share (EPS) estimate of Rs 716 on the 50-share Nifty and it benchmarked it at 19 times forward price-earnings for arriving at the target of 13,500 points.

“Our revised CY21 end Nifty-50 EPS estimate works to Rs 770. Assigning a slightly higher multiple of 19.5x (average of 19-20x) gives us a target of 15,000 for the Nifty-50 for the end of CY21,” he added.

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