Macro recovery to propel Sensex to 33,500 by year-end: Nomura

By: | Updated: January 20, 2015 2:16 AM

Betting on a continued improvement in India’s macro-economic environment, Japanese brokerage Nomura has raised...

Betting on a continued improvement in India’s macro-economic environment, Japanese brokerage Nomura has raised the CY15 year-end target for the benchmark Sensex at 33,500, implying roughly 20% upside from current levels.

The brokerage attributed its positive view to a combination of monetary and fiscal developments, along with improvement in growth cycle as well as falling cost of capital.

“…improvement in India’s macro environment over the past year is durable and will improve further. The lagged effect of the much needed complete overhaul of the political economy is a significant tailwind. The extent to which this is not yet priced in will provide upside to multiples, thus adding to market returns over and above earnings growth,” said Prabhat Awasthi, head of equity and MD – India, Nomura Financial Advisories.

Nomura, BSE Sensex, Sensex, Stock Market, political economy, Prabhat Awasthi

Nomura reiterated its overweight stance on financials, automobiles, industrials and technology companies. Axis Bank, HCL Technologies, Maruti Suzuki, NBCC and Union Bank are the top-five stocks for 2015 in Nomura’s portfolio.

“We expect market confidence in the sustainability of currently low inflation numbers to strengthen further through the year and believe interest rates are poised to fall further,” Awasthi said, adding that “growth momentum is already showing signs of improvement, which should be reflected in actual data through the year”.

In 2014, the Sensex rose by 30% and posted an all-time high of 28,822.37 on November 28. This is the highest annual gain since 2009.

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