Media sources have quoted Christopher Wood, global head of equities at Jefferies, as saying that the Sensex will soon exceed the 100,000 milestones. The Indian stock market, he said, would keep on climbing the traditional wall of concern.
“The Sensex will quickly approach the 100,000 mark. There is still a long-term bull market in India. The Indian stock market will keep scaling the figurative wall of concern. The existing consensus—that Modi will be re-elected—will inevitably be called into question over the course of the next 12 months, Wood was quoted as saying.
Five years ago, in February of 2022, Chris Wood predicted in a note that India’s benchmark BSE Sensex will reach 100,000 by the end of 2026.
Indian stocks began higher on May 26 on the back of positive global signals, after a day with significant volatility due to the May series expiration. The Sensex rose by 178.34 points to 62,050.96 and the Nifty by 51.1 points to 18,372.25.
Brokerage firm Jefferies said on May 24 that if high valuations cool and investors bet on India’s economic development potential, the country’s stock market might eventually surpass its Asian and emerging market rivals.
According to Wood’s “Greed & Fear” report, the price-to-earnings premium of the benchmark Nifty 50 Index relative to China’s Hang Seng Index fell to 115% from 208.5% at the end of October and is now in line with the 10-year average of 118.5%.
Based on its long-term outlook, the global brokerage has allocated 39% of its Asia ex-Japan long-only portfolio to India, while allocating 25% to China.
He further said, “While foreign investors have sold $2.8 billion on a net basis in Indian markets so far this year, domestic equity mutual fund inflows have remained positive.”
Domestic equities mutual fund inflows totaled 282.33 billion rupees ($3.43 billion) in the first two months of 2023, according to official statistics from the Association of Mutual Funds in India.
Wood said that although relatively high valuations are still a concern, his firm plans to keep its Asia Pacific excluding Japan relative-return portfolio slightly “overweight” in India despite the headwinds.
The domestic demand narrative is still solid, which is why investors may keep their faith in the stock market. The increase of loans has slowed, but it’s still at a healthy level. Wood also noted that the residential real estate market was improving.
Wood noted that the percentage of non-performing loans in Indian banks has fallen to an eight-year low, suggesting that Asian banking systems are notably stress-free.
