The 30-share Sensex may have hit fresh life-highs in 2017 adding to the excitement in the D-Street, however, Ridham Desai of Morgan Stanley says that the index could top 41,500 points in the next one year. Sensex was trading at 33,641 points on Wednesday morning, up by more than 30 points. Pointing out the positives which could lead the markets towards 40,000, Ridham Desai said that the corporate fundamentals are best since 2010. After India Inc posted better than expected corporate earnings in the second quarter ended September-17, many top experts say that the Indian corporates are slated to post double digit earnings growth going forward.
In an interview to ET Now, Abhimanyu Sofat ,VP- Research, IIFL said, “After a long time, we are going to hit double digit earnings growth. We look quite optimistic about the future in terms of earning momentum where the consumer cycle also improves with the shift from the unorganised to organised as well.” Further, Ridham Desai noted that growth in india is on a firm footing. It is to be noted that Sensex target at 41,500 is a bull case scenario, while the global firm predicts Sensex at 35,700 in a normal case scenario.
A recent Morgan Stanley report says that India is likely to be the world’s fastest-growing large economy in the next 10 years, driven by digitisation, favourable demographics, globalisation and reforms. According to the global financial services major, the trend line in India’s annual GDP growth has been accelerating to 6.9 per cent in 2000s, from 5.8 per cent in the 1990s, and this momentum is likely to continue in the next decade as well.
Morgan Stanley expects digitisation will provide a boost of 50-75 bps to GDP growth and forecast that India will grow to a $6-trillion economy and achieve upper-middle income status by 2026-27. “We think India’s stock market could be among the world’s best performers in the next 10 years, leading to India’s market cap rising from around $2 trillion to around $6 trillion,” the report stated.
Earlier this year, Ridham Desai had said in an interview with CNBC-TV18 that he expects the index to reach 30,000 points — that’s for NSE Nifty, not for BSE Sensex — in the next five years, on the back of renewed consumption, greatly improved exports and infrastructure spending by the government. This roughly works out to a CAGR of 25.33% for the Nifty over the next five years.