Markets surge to record highs

By: |
January 21, 2021 4:50 AM

The Sensex ended the day just a few points shy of the 50,000-mark. Though the market is trading at near lifetime high valuations, foreign portfolio investors (FPIs) continue to invest with inflows in January having already crossed $2.50 billion.

Strategists at Credit Suisse have observed the CAGR of 24% for the Nifty EPS between FY20 and FY23 appears prima facie optimistic, given weak earnings growth in FY10-20.

Amid strong global cues, Indian equities closed at record highs on Wednesday with the 50-share Nifty rallying smartly to close at 14,644.70. The Sensex ended the day just a few points shy of the 50,000-mark. Though the market is trading at near lifetime high valuations, foreign portfolio investors (FPIs) continue to invest with inflows in January having already crossed $2.50 billion.

Strategists at Credit Suisse have observed the CAGR of 24% for the Nifty EPS between FY20 and FY23 appears prima facie optimistic, given weak earnings growth in FY10-20. “However, growth is a more reasonable 16%, excluding banks and Tata Motors,” they pointed out.

The brokerage expects more meaningful upgrades to the consensus forecasts for earnings in FY22. “As the output level assumptions for FY22 GDP are reset, earnings estimates are likely to see upgrades too. While index EPS and GDP are only weakly linked, if at all, in most models the starting point for growth is the nominal GDP forecast,” they opined.

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